**Gold Price Surges Beyond $2,350 Amid Dovish Fed Tone and Weakening US Dollar**
**Original reporting by Christian Borjon Valencia, FXStreet**
The price of gold soared past $2,350 per ounce on Thursday, building on a strong multi-session rally as the US Dollar softened and Federal Reserve Governor Christopher Waller signaled growing openness to interest rate cuts later in the year. A combination of dovish remarks from the Federal Reserve, softer housing data, and persistent geopolitical tension has revived investor interest in the precious metal, which is widely regarded as a safe-haven asset during times of macroeconomic uncertainty and market volatility.
In this analysis, we explore the confluence of factors pushing gold higher, examine technical outlooks, and consider the crucial economic developments influencing global markets.
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## Key Drivers Behind Gold’s Rally
Gold has been on upward momentum since the second quarter of 2024 as several fundamental catalysts converge to bolster demand. Spot prices passed the $2,350 milestone, not seen in weeks, and the surge brought renewed attention from traders and institutional investors. Key drivers include:
### 1. Federal Reserve Dovishness
– **Waller’s Comments**: Federal Reserve Governor Christopher Waller stated on Thursday that he would be open to adjusting rates should inflation continue its downward trajectory. He observed “considerable progress” in taming price pressures, with his tone interpreted as notably softer compared to previous Fed communications.
– **Market Interpretation**: Markets read Waller’s remarks as laying the groundwork for a potential policy shift. The probability of rate cuts in the upcoming meetings increased, according to CME FedWatch Tool data, as traders recalibrated their expectations on the timing and probability of monetary easing.
### 2. Weakening US Dollar
– **Dollar Index Decline**: The US Dollar Index (DXY), which tracks the greenback versus a basket of major currencies, fell below the psychologically significant 105 level, setting a one-week low. The weaker dollar makes gold more affordable for foreign buyers, increasing demand and supporting higher prices.
– **Yield Movement**: US Treasury yields drifted lower, further diminishing the appeal of non-yielding assets such as US government bonds relative to gold, which generally flourishes in lower real interest rate environments.
### 3. Economic Data Highlights Softness
– **Housing Market Disappointment**: Recent economic releases have disappointed market participants. Housing Starts fell by 5.5 percent in May while Building Permits unexpectedly declined by 3.8 percent. Both reports missed consensus forecasts and signaled underlying pockets of weakness in the US economy.
– **Broader Trends**: Other data, including jobless claims and manufacturing gauges, contributed to the narrative that while the US economy remains resilient, a clear slowdown is emerging. The labor market’s cooling and inflation trending lower create a window for the Fed to begin policy easing without risking price instability.
### 4. Persistent Geopolitical Tensions
– **Geopolitical Risks**: Ongoing conflicts in the Middle East and uncertainty around upcoming elections globally have reinforced gold’s traditional role as a safe-haven asset.
– **Central Bank Buying**: Reports indicate continued strong demand for gold from global central banks, especially those looking to diversify from US Dollar holdings amid shifting international alliances and sanctions regimes.
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## Technical Analysis: Gold Bulls in Control
Chart analysis points to a powerful bull trend for gold, with momentum indicators suggesting that more upside may follow should current levels hold. The move above $2,350 is seen as a major technical breakout after a period of consolidation.
### Near-Term Price Levels
– **Immediate Resistance**: The next major resistance zone lies near $2,365, which aligns with recent peak levels from April and May.
– **Support Levels**: Immediate support is situated around $2,320, followed by a stronger floor near $2,300.
### Momentum Gauges
– The Relative Strength Index (RSI)
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