XAU/USD Slides as US Dollar Rebounds, Fed Signals Fewer Rate Cuts

Gold prices declined sharply on Monday, falling towards $2,600, as the US Dollar strengthened. The US Dollar Index (DXY) rebounded above 108.00, making gold more expensive for holders of other currencies.

While lower US Treasury yields typically weigh on gold, the relationship between the two assets was less pronounced on Monday. The Federal Reserve’s (Fed) recent indication of fewer interest rate cuts in 2025 has created uncertainty in the gold market.

The Fed has signaled a more gradual pace of monetary easing due to stronger-than-expected economic data and a slower decline in inflation. Policymakers are now projecting only two more quarter-point rate cuts next year, down from earlier expectations.

Analysts at Goldman Sachs anticipate the first rate cut in March, followed by two more later in the year.

Technical Outlook

Gold price is currently trading within a Symmetrical Triangle pattern on the daily chart, indicating a period of low volatility. The 20-day Exponential Moving Average (EMA) is near the current price level, suggesting a sideways trend.

The Relative Strength Index (RSI) is oscillating within a neutral range, suggesting indecisiveness among market participants.

A decisive break above the recent high of $2,726 could signal a bullish trend for gold. Conversely, a break below the recent low of $2,537 would strengthen the bearish case.