Gold Holds Despite Intraday Losses as Fed Rate-Cut Bets Weaken the Dollar
Gold traded around $2,150/oz and held most intraday losses as growing market bets on Federal Reserve rate cuts in 2025 pressured the US dollar. The CME FedWatch Tool now prices a high probability of at least two 25bp cuts by September, following softer inflation (Core PCE 2.3%) and stable unemployment (4.1%). Powell’s dovish testimony and falling US Treasury yields reduced the dollar’s yield advantage, supporting gold by lowering the opportunity cost of holding non‑yielding assets. Technicals show the 50‑day moving average acting as support, RSI pulling back from overbought levels, subdued selling volume, and a consolidation zone near $2,120–$2,180. Traders should watch upcoming CPI and Non‑Farm Payrolls data for directional cues. Two scenarios are noted: a bull case where orderly disinflation enables cuts and pushes gold higher (potentially toward all‑time highs), and a caution case where sticky inflation delays cuts and strengthens the dollar, capping gold’s upside. Key takeaways for traders: monitor Fed communications, the US Dollar Index (DXY), real yields, and critical technical levels (50‑ and 200‑day moving averages; $2,120–$2,180 range).
Bullish
The article links rising market expectations of Fed rate cuts to a weaker US dollar and lower real yields — classical bullish drivers for gold. Key fundamentals cited (Core PCE 2.3%, unemployment 4.1%) and dovish Fed commentary increased the probability of multiple 25bp cuts in 2025 per the CME FedWatch Tool. Historically, expectations of easing and falling real yields have supported gold rallies (e.g., post‑2008 Fed easing). Technicals reinforce the bullish bias: 50‑day moving average acting as support, RSI retreating from overbought, and low selling volume suggesting consolidation rather than distribution. Short‑term risks remain (sticky inflation or stronger‑than‑expected data that delays cuts could bolster the dollar and cap gains), but medium‑term outlook (6–12 months) favors higher gold if the Fed follows through. For crypto markets, a weaker dollar and lower yields can boost risk assets and dollar‑priced commodities—potentially increasing liquidity flow into crypto and stablecoin demand for hedging—so traders should monitor DXY, real yields, CPI/NFP prints, and Fed guidance to time positions. Similar past episodes (Fed pivot expectations in 2020–2021 and post‑2008 easing) saw initial volatility followed by sustained upward trends for gold and broader risk appetite improving after clarity on policy paths.