Gold in turmoil: All eyes on the Fed

Gold retreated below 3,630 USD per ounce on Monday, pulling back from last week’s record highs as investors locked in profits ahead of a pivotal US Federal Reserve policy decision.

Markets are widely anticipating a 25-basis-point rate cut this week, driven by mounting evidence of labour market softness. Expectations of further easing in 2025 are also being priced in.

Ahead of the Fed meeting, investor attention will focus on key US data releases, including retail sales and industrial production, which may offer additional clues about the health of the economy.

In a move that has raised eyebrows, the Trump administration on Sunday appealed to a federal court to remove Fed Governor Lisa Cook, heightening concerns over the central bank’s independence.

Meanwhile, traders are closely monitoring US-China trade negotiations, which resume in Madrid on Tuesday for a second day of talks.

Technical analysis: XAU/USD

H4 Chart:

On the H4 chart, XAU/USD formed a tight consolidation range around 3,486 USD before breaking upward to complete an impulsive move towards 3,674 USD. The market is now showing signs of exhaustion, and a decline towards 3,591 USD appears likely. Currently, price action suggests the formation of a new consolidation range around 3,636 USD. A break below this range could extend the correction toward 3,486 USD, while an upward breakout might see a retest of 3,700 USD before any significant reversal. The MACD indicator supports this corrective outlook: the signal line remains above zero but has diverged from the histogram, indicating weakening momentum and potential downside.

H1 Chart:

On the H1 chart, the pair formed a consolidation range around 3,654 USD before breaking downward to complete the first leg of a correction at 3,611 USD. Following a retracement to 3,647 USD, the market appears set to resume its decline towards 3,593 USD. A break below this level could open the door to a deeper drop toward 3,486 USD. The Stochastic oscillator aligns with this bearish near-term view, with its signal line hovering above 80 and poised to turn lower towards 20.

Conclusion

Gold is consolidating near all-time highs as traders await clarity from the Fed. While the broader bullish trend remains supported by expectations of monetary easing and geopolitical uncertainty, a short-term correction is underway. The Fed’s tone – along with developments in US-China talks and political pressure on the Fed – will be crucial in determining whether this pullback deepens or becomes a buying opportunity.