(Kitco News) – Gold prices are holding near their 50-day moving average as markets are now pricing in a near-certain September rate cut, and this week’s key data could determine the yellow metal’s near-term direction, according to analyst James Hyerczyk at FX Empire.
Hyerczyk noted that gold prices were edging higher late Wednesday afternoon, clinging to the 50-day moving average of $3,325.10 that has influenced long-term direction since the start of the year.
“This marks the second consecutive session gold has hovered near this technical benchmark without breaking decisively, as traders brace for key U.S. economic data that could influence interest rate expectations,” he said. Markets are awaiting GDP, employment, and PCE data on Thursday and Friday.
“The recent ceasefire between Iran and Israel has softened safe-haven demand, easing geopolitical stress that had previously underpinned bullion,” Hyerczyk said. “President Trump voiced optimism on a lasting resolution with Tehran, indicating that renewed diplomacy could prevent a restart of its nuclear program. This easing of tensions has removed a major driver for risk-off positioning, keeping gold capped despite a broadly supportive environment.”
He noted that the U.S. Dollar Index (DXY) also remains under pressure as it has proven incapable of closing above its 50-day moving average at 99.400.
“Tuesday’s high of 99.421 failed to break that ceiling, reinforcing resistance and exposing DXY to further downside,” he said. “With the index drifting near support at 97.621, a breakdown could trigger deeper losses toward 95.137, especially as rate cut expectations firm.”
Meanwhile, the market continues to grow more optimistic about potential rate cuts later this year.
“Federal Reserve Chair Jerome Powell reiterated in congressional testimony that the central bank remains cautious but would move on rate cuts if inflation stays contained,” Hyerczyk said. “Markets interpreted his comments—and dovish remarks from Fed officials Bowman and Waller—as laying the groundwork for easing. A September cut is now priced in with over 85% probability, and futures are pricing in 60 basis points of cuts by year-end.”
Turning to the technical picture for gold prices, Hyerczyk said the yellow metal’s recent breakout ran out of steam well before a retest of the all-time high at $3500.20. “The inability to sustain upward drive has prompted traders to fade rallies, reinforcing short-term bearish sentiment,” he said.
Hyerczyk said the 50-day moving average of $3325.10 is a critical pivot level. “If upcoming GDP, jobs, and PCE data do not significantly underwhelm expectations, gold may stay rangebound or push lower, with downside targets at $3228.28 and $3166.46,” he wrote. “Analysts warn that without renewed geopolitical tension or a decisive dollar breakdown, gold could slide toward $2900 in the near term.”
