FX.co ★ View | XAU/USD, GOLD

Gold prices continued their impressive rally on Tuesday, climbing for a third consecutive day to reach a new all-time high of $3,674 per ounce. However, the precious metal has since retreated, trading around $3,646 and showing a modest gain of 0.30% on the day. The recent gains in gold were limited by a rebound in the US dollar, which has been under significant pressure but found some footing following a key jobs data revision. The primary driver of golds recent strength has been the growing conviction that the Federal Reserve will cut interest rates at its upcoming meeting. This sentiment was solidified by the release of the preliminary annual benchmark revision to US non-farm payrolls data, which showed a significant downward revision. According to Bloomberg, the US Bureau of Labor Statistics (BLS) lowered its annual employment forecast through March 2025 to -911,000, which was even worse than economists estimates of -682,000. This data highlights a much weaker labor market than previously believed, which fundamentally supports the case for a Fed rate cut. A rate cut would lower the opportunity cost of holding non-yielding assets like gold and would likely put downward pressure on the US dollar, making gold more attractive for international buyers. However, the initial shock of the data triggered a wave of short-covering in the dollar, causing it to stage a slight recovery from its seven-week low. The US Dollar Index (DXY), which measures the greenbacks performance against a basket of six major currencies, rose by 0.24% to 97.68. While the jobs data has reinforced a dovish outlook for the Fed, the path forward is not without risks. Traders are now closely monitoring upcoming inflation data, which could complicate the Feds decision-making. The Producer Price Index (PPI) is scheduled for release on Wednesday, followed by the more closely watched Consumer Price Index (CPI) on Thursday. If these inflation figures come in hotter than expected, it could prevent the Fed from easing its policy as aggressively as the market has priced in. A surprising rise in inflation could lead to a stronger dollar and a pullback in gold prices. Traders will also be watching the release of initial jobless claims on Thursday for any signs of a continued slowdown in the labor market. From a technical perspective, golds uptrend remains intact despite the recent pullback. The Relative Strength Index (RSI) is in the overbought zone, but it has not yet reached the critical 80 level, which would signal a more imminent price top. A negative close for the day could see gold test the $3,600 level. If sellers push the price below that, the next target could be the April 22 high of $3,500. On the other hand, a decisive break above the all-time high of $3,674 would open the door for a challenge to the psychological levels of $3,700, followed by $3,750 and $3,800. In summary, golds fate in the near term will be determined by the interplay between the dovish Fed outlook and the upcoming US inflation data.