Gold News: Softer Dollar Lifts Prices as Investors Await Fed’s 2025 Outlook

Gold Prices Test Resistance as Fed Meeting Looms

Gold prices edged higher on Monday, supported by a softer U.S. dollar, as traders awaited the Federal Reserve’s policy meeting this week. The Fed is widely expected to announce a 25-basis-point rate cut, marking its third reduction this year, while providing updated projections for 2025 and beyond.

At 13:06 GMT, XAU/USD is trading $2663.84, up $15.16 or +0.57%.

Key Resistance Levels Hold Gold in Check

Gold is currently testing resistance at a critical zone between $2663.51 and $2693.40. Within this range, the 50-day moving average at $2670.85 adds additional pressure, curbing further upside momentum. On the downside, support is seen between $2629.13 and $2607.35. The price action suggests a near-term rangebound trade within these levels unless a significant catalyst emerges to drive a breakout.

Softer Dollar Provides Support

The dollar index (.DXY) dipped by 0.1% after reaching a two-week high on Friday, making gold more affordable for holders of other currencies. Non-yielding assets like gold tend to benefit in lower interest rate environments or during periods of economic uncertainty.

UBS analyst Giovanni Staunovo noted, “Market participants are awaiting the FOMC meeting and any guidance on future rate cuts.” He added that UBS anticipates a 25-bps cut this week, with additional cuts through next year, potentially driving gold prices toward $2,900/oz by mid-2025.

Focus Shifts to Fed Guidance

The Federal Reserve’s two-day meeting begins Tuesday, with markets pricing in a 97% probability of a 25-bps rate cut, according to the CME FedWatch Tool. Investors are closely monitoring Chair Jerome Powell’s comments for signals on the trajectory of interest rates into 2025. Lower rates could bolster demand for gold as an alternative investment, particularly as Treasury yields eased slightly on Monday.

Economic and Geopolitical Factors Add to Bullion’s Appeal

In addition to the Fed meeting, geopolitical uncertainty and upcoming economic data releases—including GDP figures, the PCE inflation index, and consumer sentiment—may influence gold prices this week. Citi analysts predict strong demand for gold and silver until U.S. interest rates stabilize near neutral levels, likely in late 2025 or early 2026.

Market Forecast: Bullish Outlook for Gold

Gold’s near-term outlook appears bullish, underpinned by expectations of a dovish Fed and persistent economic risks. While resistance at $2693.40 may cap gains initially, a dovish policy statement or weaker-than-expected U.S. data could pave the way for a breakout above this range, with potential upside targets near $2700. Traders should monitor Fed guidance and macroeconomic indicators closely this week.

More Information in our Economic Calendar.