Gold Surpasses $3,000 as Fed Decision Looms – What’s Next for XAU/USD?

Gold (XAU/USD) made history this week, briefly surpassing the $3,000 mark for the first time before pulling back to $2,982, down 0.21% on the day.

The rally was fueled by a weaker U.S. dollar, growing geopolitical risks, and shifting Federal Reserve expectations.

The U.S. Dollar Index (DXY) fell 0.14% to 103.71, reflecting recession fears and rising expectations of Fed rate cuts in 2025. Market projections now anticipate 66 basis points of rate cuts, down from 74 bps previously, reinforcing gold’s appeal as a safe-haven asset.

Additionally, consumer sentiment took a hit, with the University of Michigan (UoM) Consumer Sentiment Index plunging from 64.7 to 57.9, further supporting gold prices. The inflationary impact of Trump’s proposed tariffs on steel and aluminum is also weighing on the dollar, making gold more attractive.

Geopolitical Risks & Central Bank Demand Fuel Gold’s Rise

Gold’s rally is also being driven by global political uncertainty, particularly regarding the Russia-Ukraine ceasefire talks. With Russia showing resistance to a 30-day truce, investor anxiety remains high, boosting demand for safe-haven assets.

At the same time, China’s central bank continues to accumulate gold, marking its fourth consecutive month of reserve increases, according to the World Gold Council. This underscores gold’s importance as a hedge against economic instability, with central banks worldwide reinforcing its role in global reserves.

Key Economic Events That Could Drive Gold Next Week

Gold traders are closely watching the Federal Reserve’s rate decision on March 19, along with other critical economic data:

Major U.S. Economic Events

• March 18: U.S. Core Retail Sales (0.3% expected, -0.4% previous)

• March 19: Federal Funds Rate decision (4.50% expected)

• March 19: FOMC Statement & Economic Projections

• March 20: U.S. Unemployment Claims (222K expected, 220K previous)

• March 20: Philly Fed Manufacturing Index (9.4 expected, 18.1 previous)

A dovish tone from the Fed or weaker-than-expected economic data could further boost gold prices. However, any hawkish signals from the Fed may apply downward pressure.

Gold Price Outlook: Will Bulls Defend $2,973 Support?

Gold is currently trading near $2,984, with $2,994 acting as immediate resistance. The Fibonacci retracement tool highlights $2,973 (23.6%) as key support, while the 50-period EMA at $2,951 aligns with the 50% retracement level, reinforcing downside protection.

Key Levels to Watch

• Immediate Resistance: $2,994

• Next Resistance: $3,009 – $3,023

• Major Upside Target: $3,036

• Immediate Support: $2,973 (23.6% Fib)

• Next Support: $2,960 – $2,950

• Stronger Support Zone: $2,939 – $2,906

If gold holds above $2,973, bulls may attempt to retest the $3,009-$3,023 zone. However, failure to maintain momentum could lead to a pullback toward $2,950-$2,939, an area where buyers are likely to step in.