Can gold prices continue to break through amid the Federal Reserve's rate cut wave? Technical signals provide insights

Hedging Demand and Dovish Expectations Double Drive, Gold Prices Steady Above $4250

Gold prices have recently experienced a remarkable rally, reaching a six-week high under the combined influence of multiple factors. Among them, dovish comments from Federal Reserve officials have become the main catalyst—Federal Reserve Board member Christopher Waller and New York Fed President John Williams have successively signaled the possibility of further rate cuts, directly boosting market demand for the yieldless asset, gold.

Meanwhile, White House economic advisor Kevin Hasset recently expressed willingness to serve as the next Fed Chair and pledged to implement more aggressive rate cuts, undoubtedly adding fuel to the upward momentum of gold prices. Dovish expectations have exerted substantial pressure on the US dollar, with the dollar index falling to a near two-week low, further reducing the opportunity cost of holding gold.

Geopolitical and Economic Data Simultaneously Boost Market Caution

The rise in gold prices is not an isolated event but reflects subtle shifts in market risk sentiment. Slowing economic growth in China has become a new disturbance—private survey data released on Monday showed manufacturing activity unexpectedly contracting into the contraction zone, marking the eighth consecutive month of PMI decline. This pessimism among investors has directly flowed into safe-haven assets.

Additionally, the Russia-Ukraine conflict continues to escalate. Ukrainian naval drones attacked Russian “shadow fleet” oil tankers, bringing geopolitical risks back into focus. Asian stock markets generally showed weakness, with investors shifting funds into traditional safe-haven assets like gold. US economic data released last week presented a mixed picture, failing to provide clear guidance for market expectations, further supporting gold prices.

Technical Signals Clear, $4300 Becomes Key Target

From the candlestick chart perspective, if gold can remain stable above the $4250 level, it will confirm a new buy signal for the bulls. Based on the positive momentum reflected in the daily oscillation indicators, gold is expected to break through the technical resistance near $4277-4278 and then challenge the $4300 mark. This forecast is supported by upward trend lines and related moving averages providing technical support.

On the downside, the Asian session saw a low around $4200 forming a defensive line. If gold falls below this level, investors may find new support in the $4155-4153 range. Continued downward breaks could trigger technical sell-offs, risking accelerated declines, with $4100 and $4073 serving as further support levels (these include the 200-period exponential moving average on the 4-hour chart and the upward trend line since late October).

Market Focus: US Economic Data and Policy Expectations as Key Variables

Traders are currently awaiting the release of this week’s US macroeconomic data. The ISM Manufacturing PMI will be announced later during North American trading hours, and this report will directly influence market expectations regarding the Fed’s policy path. A series of US economic indicators at the start of the new month will also have a profound impact on dollar demand and the short-term trend of XAU/USD.

In the current context, bulls are observing the market rhythm ahead of these key data releases, avoiding impulsive actions before clear signals emerge. The subsequent performance of gold will largely depend on how these macro variables evolve and the market’s latest understanding of the Fed’s easing stance.