Gold Soars to Record High as Fed Uncertainty Weighs on US Dollar

• Gold prices surged to a new record high following Trump’s criticism of Fed Chair Powell for not implementing rate cuts, labeling him a “major loser.”
• The US Dollar Index (DXY) fell sharply to 97.92 amid concerns about the Federal Reserve’s independence and persistent stagflation risks.
• Market participants are closely watching upcoming speeches from Fed officials Jefferson, Harker, and Kashkari this week, as policy uncertainty intensifies.

Gold prices commenced the week with an increase, appreciating over 2.56% and achieving a new record high of $3,430 amidst uncertainty regarding statements that could impact the Federal Reserve’s (Fed) autonomy. Currently, XAU/USD is trading at $3,419, subsequent to reaching a daily low of $3,329.

Demand for gold has risen as US President Donald Trump maintains pressure on the Fed, criticizing Fed Chair Jerome Powell and asserting that he consistently acts belatedly in lowering borrowing costs.

In the preceding week, Powell indicated that the US central bank has adopted a cautious approach and alluded to the potential for a stagflationary situation, acknowledging the possibility of “a challenging scenario in which our dual-mandate goals are in tension.”

Escalating tensions between Trump and Powell, coupled with contentious trade policies, have negatively affected the US Dollar, with the US Dollar Index (DXY) declining to a three-year low of 97.92.

In terms of economic data, the US economic calendar is presently sparse; however, activity is anticipated to increase, predominantly driven by Federal Reserve officials’ remarks. Vice-Chair Philip Jefferson, Philadelphia Fed President Patrick Harker, and Minneapolis Fed President Neel Kashkari are scheduled to deliver speeches on Tuesday.

Gold Price Reaches Historic High Despite Elevated US Yields

• The US 10-year Treasury yield increased by four basis points to 4.373%, yet this increase did not constrain gold prices.
• US real yields also increased, rising by three and a half basis points to 2.14%, as evidenced by the US 10-year Treasury Inflation-Protected Securities yields.
• In fixed income markets, money market participants have priced in 94.5 basis points of Federal Reserve rate reductions by the conclusion of 2025, with the initial rate cut anticipated in July.
• This week’s US economic calendar features numerous speeches from Federal Reserve officials, S&P Global Flash Purchasing Managers’ Indices, Durable Goods Orders, and the final University of Michigan Consumer Sentiment reading.

XAU/USD Technical Analysis: Gold Price Expected to Approach $3,450 in the Short Term

The upward trajectory of gold prices remains intact, with the potential to test the $3,500 level forecasted by Citi within the next quarter. The Relative Strength Index (RSI) has entered overbought territory, suggesting a possible price retracement; however, exceeding the recent peak may propel bulls toward $3,450 in the near term.

Conversely, should XAU/USD decline below $3,400, initial support would be found at the April 17 high of $3,357, followed by $3,300.