Gold Holds Steady: Dovish Fed Hints and Data Shape Outlook

Gold prices find support on Friday, with XAU/USD hovering near $3,350, as a potential Federal Reserve softening and declining yields keep the market in play. With mixed momentum and key data in focus, the question arises—can gold maintain its footing, or will shifts tip the scales?

Consumer Confidence and Housing Boost Sentiment

The University of Michigan’s preliminary July Sentiment index climbed to 61.8 from 60.7, topping the 61.5 forecast, signaling rising US consumer confidence. June Building Permits hit 1.39 million, exceeding the 1.394 million estimate with a 0.2% rise, while Housing Starts jumped 4.6% to 1.321 million from 1.263 million, reversing a prior 9.7% drop. These gains highlight a resilient real estate sector, influencing gold’s direction.

Inflation Expectations Ease

July’s 1-year inflation expectations dipped to 4.4% from 5%, and 5-year expectations fell to 3.6% from 4%, per the University of Michigan data. With the Fed maintaining rates at 4.25%-4.50%, investors seek clues on future cuts. The CME FedWatch Tool shows a 57.8% chance of a 25-basis-point cut in September, with a 39.5% likelihood of no change, reflecting uncertainty.

Fed Voices Diverge

Fed Governor Adriana Kugler cautioned against near-term easing, citing tariff-driven price pressures, while San Francisco’s Mary Daly suggested two cuts by year-end, wary of labor market risks. In contrast, Governor Christopher Waller advocated a 25-basis-point July cut, pointing to growth and employment concerns. Wednesday’s Consumer Price Index rise, however, hints at a possible October delay.

What’s Next for Gold?

Gold’s path depends on Fed rhetoric and data trends. A dovish shift could lift it past $3,350, but persistent inflation might cap gains. Markets teeter—will gold rise, or will economic strength weigh it down?