Gold climbs past $4,600 amid increasing expectations of Fed rate cuts and heightened demand for safe-haven assets

Gold Prices Edge Higher Amid Fed Rate Cut Speculation

Gold (XAU/USD) is making gains, approaching its all-time high of $4,634.64 set in the previous session, and is currently valued near $4,620.00 per troy ounce as of Wednesday. The precious metals market, particularly gold, is drawing increased interest as expectations grow for the Federal Reserve to lower interest rates, following signs of easing inflation in the United States.

Recent inflation figures for December in the US indicate that underlying price pressures are subsiding, reinforcing the belief that inflation is gradually cooling. Futures markets show investors are split between anticipating two or three rate reductions from the Fed this year, which is notably more than the central bank’s own forecast of just one cut.

Gold has also benefited from heightened safe-haven demand, fueled by renewed concerns about the Fed’s autonomy after US prosecutors initiated a criminal investigation related to Chair Powell’s testimony in June. Ongoing geopolitical tensions, especially regarding potential US involvement in Iran’s internal unrest and repeated warnings of possible military intervention, are keeping risk levels elevated.

Key Market Drivers: Gold Strengthens as US Dollar Loses Ground

• The US Dollar Index (DXY), which tracks the dollar’s performance against six major currencies, has slipped after modest gains in the prior session. Currently trading around 99.10, the weaker dollar is making gold more attractive to international buyers.
• Core US Consumer Price Index (CPI), which excludes food and energy, rose by 0.2% in December—below forecasts—while annual core inflation held steady at 2.6%, matching a four-year low. This data provided clearer evidence of moderating inflation, especially after earlier numbers were distorted by government shutdown effects. Headline CPI increased by 0.3% month-over-month in December 2025, in line with expectations and mirroring September’s rise. Yearly inflation remains at 2.7% as projected.
• President Trump announced on Monday a 25% tariff on goods from any nation trading with Iran, intensifying pressure on Tehran amid widespread protests. He stated the tariffs would be implemented immediately, though further details were not provided. Trump also indicated that action might be necessary before any diplomatic meetings, even as he claimed Iranian leaders had reached out to negotiate following his military threats.
• Federal prosecutors in the US have threatened to indict Fed Chair Jerome Powell over his congressional testimony regarding a building renovation, raising fresh questions about the central bank’s independence. The Trump administration has been urging the Fed to lower interest rates, with Powell describing the legal threat as an attempt to sway monetary policy.
• US Nonfarm Payrolls (NFP) increased by 50,000 in December, falling short of November’s revised figure of 56,000 and below the market’s expectation of 60,000. Nevertheless, the unemployment rate dropped to 4.4% from 4.6% in November, and average hourly earnings rose to 3.8% year-over-year, up from 3.6% previously.
• Richmond Fed President Tom Barkin welcomed the decline in unemployment, describing job growth as steady but moderate. He noted that hiring remains limited outside of sectors like healthcare and artificial intelligence, and said it is still uncertain whether the labor market will see more hiring or layoffs in the near future.

Technical Outlook: Gold Faces Potential Downturn as Uptrend Weakens

On Wednesday, gold (XAU/USD) is trading near $4,620. Technical analysis of the daily chart reveals that the pair is forming an ascending wedge pattern, which typically signals fading upward momentum and raises the risk of a bearish reversal if prices fall below the lower trendline with significant volume.

The nine-day Exponential Moving Average (EMA) remains above the 50-day EMA, confirming a prevailing bullish trend. Gold prices are holding above the shorter-term average, and the 50-day EMA continues to slope upward, highlighting ongoing medium-term strength. However, the 14-day Relative Strength Index (RSI) stands at 71.39, indicating overbought conditions and suggesting that momentum may be stretched even as the uptrend persists.

Immediate resistance is found at the record high of $4,634.64, set on December 13, which aligns with the upper edge of the ascending wedge. A decisive move above this resistance zone could see XAU/USD aiming for the $4,650 level. On the downside, initial support is located at the nine-day EMA of $4,520.01, followed by the lower boundary of the wedge near $4,470.00.

(This technical analysis was prepared with the assistance of an AI tool.)