Gold Holds Ground Despite Reduced Fed Rate Cut Expectations

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Gold (XAU/USD) rebounded from lows near $2,330 on Thursday, demonstrating resilience despite diminished expectations for an imminent Federal Reserve (Fed) pivot toward rate cuts.

Market Sentiment: Rate Cut Bets Fade, Safe-Haven Demand Persists

Traders have scaled back expectations for a Fed rate cut in June following hotter-than-expected March Consumer Price Index (CPI) data. Persistent inflation strengthens the case for the Fed maintaining higher interest rates within the 5.25%-5.50% range for a longer duration. This generally favors interest-bearing assets, boosting US bonds and the US Dollar. While 10-year Treasury yields and the Dollar Index (DXY) retreated slightly, they remain near multi-month highs.

However, elevated geopolitical risks continue to support safe-haven demand for Gold. Fears of Iranian involvement in the Israel-Hamas conflict and persistent central bank buying provide a floor for Gold prices.

Technical Outlook: Gold Eyes Retest of Highs, RSI Signals Overbought

Gold is striving to regain fresh highs near $2,365 following the sticky US inflation data. While a mild correction is anticipated due to overbought momentum indicators like the Relative Strength Index (RSI), the near-term outlook remains bullish with upward-sloping Exponential Moving Averages (EMAs). Key support lies at the March 21st high of $2,223.


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