XAU/USD remains depressed below monthly top on firmer USD, mixed Fed outlook

• Gold attracts heavy selling on Tuesday and reverses a major part of the previous day’s gains.
• A modest USD uptick and signs of stability in the equity markets undermine the commodity.
• Fed rate cut bets, trade jitters, and geopolitical risks could limit losses for the precious metal.

Gold (XAU/USD) retreats sharply from the $5,250 level, or a fresh monthly peak touched during the Asian session, and for now, seems to have snapped a four-day winning streak. Following the previous day’s knee-jerk fall in reaction to US President Donald Trump’s new global tariffs and the subsequent bounce, the US Dollar (USD) attracts fresh buyers in the wake of the US Federal Reserve’s (Fed) hawkish outlook. This, in turn, is seen as a key factor exerting downward pressure on the commodity.

In fact, minutes from the January FOMC meeting showed last week that several Fed officials judged that additional policy easing may not be warranted until there was a clear indication that the progress of disinflation was firmly back on track. Adding to this, Governor Christopher Waller said on Monday that he was open to leaving interest rates on hold at the March meeting if the upcoming February jobs data indicates the US labor market had “pivoted to a more solid footing” after a weak 2025.

However, the CME Group’s FedWatch Tool indicates that traders are still pricing in the possibility of three 25-basis-point (bps) rate cuts by the Fed this year, which should act as a tailwind for the non-yielding Gold. Moreover, concerns about the potential economic fallout from Trump’s trade policies might keep a lid on any meaningful USD appreciation and contribute to limiting the downside for the precious metal, warranting some caution for bearish traders and positioning for deeper losses.

Apart from this, worries about potential military conflict in the Middle East could help limit the downside for the safe-haven Gold ahead of the third round of US-Iran nuclear talks. This, in turn, makes it prudent to wait for strong follow-through selling before confirming the XAU/USD pair’s one-week-old uptrend has run out of steam. Traders now look forward to the US macro data, which, along with speeches from influential FOMC members, could provide some impetus later this Tuesday.

(This story was corrected on February 24 at 04:06 GMT to say that speeches from influential FOMC members could provide some impetus later this Tuesday, not Thursday.)

XAU/USD 4-hour chart

Gold might continue to find decent support near the $5,100 resistance-turned-support

Against the backdrop of the recent rebounds from the 200-period Simple Moving Average (SMA), the overnight breakout above the $5,100-$5,110 horizontal barrier was seen as a fresh trigger for the XAU/USD bulls. The said area coincides with the 61.8% Fibonacci retracement level of a sharp corrective pullback from the all-time peak and should act as a key pivotal point.

The Moving Average Convergence Divergence (MACD) remains in positive territory but has cooled from recent peaks, hinting at moderating upside momentum. The Relative Strength Index (RSI) prints 65.78, easing from overbought and aligning with a slower ascent. Hence, the 78.6% Fibonacci retracement at $5,314.49 could now act as the important resistance to clear.

A 4-hour close above the latter would open further gains, which a failure to maintain traction above $5,123.17 would signal fading momentum and risk a deeper pullback toward the moving average. As long as the Gold holds above the rising 200-period SMA at $4,909.70, the path of least resistance stays higher.