Gold (XAU/USD) came under renewed selling pressure in the Asian trading session on Monday, with the precious metal retreating toward $3,350. The move was largely driven by a firmer US Dollar (USD) as investors reassessed interest rate expectations ahead of key economic data releases. 

While the near-term tone looks somewhat heavy, the yellow metal continues to retain longer-term bullish undertones, supported by monetary policy expectations and geopolitical risks. Michelle Becker, a Primeber Group broker, delivers a detailed analysis of the subject in her latest piece.

Gold Price Under Pressure in Asia

The gold price edged lower during the session, reflecting the resurgence of demand for the US Dollar. This dynamic typically weighs on USD-denominated commodities, making them relatively more expensive for non-dollar holders. 

With traders bracing for Thursday’s release of the US Q2 Gross Domestic Product (GDP) preliminary reading, the market mood turned cautious, keeping demand tilted toward the Greenback.

Fed Signals and Rate Cut Hopes

A significant driver for gold remains the outlook for Federal Reserve (Fed) policy. Last week, at the Jackson Hole symposium, Fed Chair Jerome Powell acknowledged that the door is open for a rate cut in September. 

He noted that the US economy faces a “challenging situation,” with inflation risks tilted to the upside while employment risks lean to the downside.

These dovish remarks were interpreted as a softening stance, sparking optimism for lower rates in the months ahead. According to the CME FedWatch Tool, markets are now pricing in an 85% probability of a 25 basis points (bps) rate cut in September, up from 75% prior to Powell’s comments. 

For gold, lower interest rates reduce the opportunity cost of holding non-yielding assets, thus serving as a tailwind.

Still, some Fed officials remain cautious. St. Louis Fed President Alberto Musalem emphasized the need for more data before committing to easing, citing that inflation remains above the 2% target. 

Boston Fed President Susan Collins also highlighted that, while US fundamentals are “solid,” the impacts of tariffs could exert a persistent influence on inflation. These remarks suggest that the Fed remains data-dependent, adding a layer of uncertainty to the policy outlook.

Physical Gold Demand in Asia

From a physical demand perspective, interest across Asian hubs has been relatively subdued. Price volatility discouraged buyers last week, though Indian jewelers have reportedly resumed purchases ahead of the festival season. 

Traditionally, Indian demand plays a pivotal role in stabilizing prices during volatile trading conditions, and seasonal buying trends may offer medium-term support.

Technical Analysis: Gold Holds a Bullish Bias

From a technical standpoint, the gold price trades in negative territory on the day, yet the broader outlook remains constructive. On the daily chart, XAU/USD continues to hold above its 100-day Exponential Moving Average (EMA), maintaining a bullish structure.

The 14-day Relative Strength Index (RSI) currently hovers around the midline, signaling neutral momentum in the short run. This suggests that consolidation could persist before a decisive directional breakout.

Resistance Levels:

• $3,400–3,410: Psychological zone, August 8 high, and the upper Bollinger Band.
• $3,439: July 23 high.
• $3,500: Key round figure, also the April 22 high.

A sustained break above these levels could reinvigorate bullish momentum and drive the yellow metal toward fresh multi-month highs.

Support Levels:

• $3,315: August 19 low.
• $3,285: Lower Bollinger Band.
• $3,268: 100-day EMA.

A clear move below these supports could encourage deeper retracements, though buyers are likely to emerge on dips given the macro-supportive backdrop.

Market Outlook: Balancing Fundamentals and Risk Sentiment

The near-term trajectory for gold will hinge on two main variables: US Dollar strength and incoming economic data. A stronger-than-expected GDP report risks amplifying dollar demand, keeping gold under pressure. Conversely, confirmation of moderating growth could reinforce expectations of monetary easing, helping XAU/USD recover toward key resistance levels.

At the same time, geopolitical headlines from Eastern Europe will remain a source of volatility. Any escalation of the Russia-Ukraine conflict is likely to feed safe-haven demand, limiting the downside.

Conclusion

Gold is currently caught in a tug-of-war between a resurgent US Dollar and expectations for Fed easing. While Monday’s session saw modest selling pressure, the broader backdrop, shaped by dovish Fed signals, geopolitical risks, and seasonal demand trends, continues to support a long-term bullish bias. 

Traders will closely monitor upcoming US GDP figures for directional cues, while keeping an eye on Russia-Ukraine developments for their potential to spark safe-haven flows. In short, while the $3,350 level faces near-term tests, the precious metal retains potential to recover, especially if macroeconomic conditions and risk sentiment shift in its favor.