Gold prices (XAU/USD) extended gains for a second straight session on Tuesday, climbing over 1.5% to $3,289 amid a weaker US Dollar and Moody’s US credit rating downgrade. Growing economic uncertainty and dovish central bank policies worldwide are fueling bullish momentum, with analysts eyeing $3,300 as the next key resistance level.
Key Drivers Behind Gold’s Rally
1. Moody’s US Credit Downgrade Shakes Markets
Moody’s cut the US government’s credit rating from AAA to AA1, citing worsening fiscal health and political gridlock.
The downgrade has weakened the US Dollar (DXY down 0.21%), boosting demand for gold as a safe-haven asset.
2. Fed Rate Cut Uncertainty & Stagflation Fears
Fed officials remain cautious, with Atlanta Fed’s Bostic favoring just one rate cut in 2025.
Cleveland Fed’s Beth Hammack warned of rising stagflation risks, complicating the Fed’s inflation fight.
Despite higher Treasury yields (10-year at 4.477%), gold continues to rally as investors hedge against economic instability.
3. Global Central Banks Easing Monetary Policy
China (PBoC) and Australia (RBA) cut interest rates, reinforcing gold’s appeal as a non-yielding asset.
More rate cuts expected from the ECB and BoE, further supporting bullion demand.
4. Geopolitical Tensions Fuel Safe-Haven Flows
Escalating Russia-Ukraine war and Middle East conflicts drive investors toward gold.
Gold Price Forecast: Where Next for XAU/USD?
Technical Outlook: Bulls Target $3,300 and Beyond
Double-top pattern negated as gold resumes its uptrend.
RSI momentum favors buyers, with resistance levels at:
$3,300 (psychological barrier)
$3,350 (next resistance)
$3,400-3,438 (May highs)
Support levels:
$3,250 (immediate floor)
$3,200 & 50-day SMA ($3,176)
Institutional Bullish Forecasts
Goldman Sachs predicts gold at $3,700 by year-end, potentially hitting $4,000 by mid-2026.
What’s Next for Gold Traders?
This week’s key events that could impact gold prices:
Fed speeches (further clues on rate cuts)
Flash PMIs & US jobless claims (economic health indicators)
Housing data (inflation signals)
Bottom Line
With rising stagflation risks, a weaker USD, and global rate cuts, gold’s rally appears well-supported. A break above $3,300 could trigger a move toward $3,500, while any pullback should find strong buying interest near $3,200.