Gold Pulls Back as Dollar Strengthens, But Fed Rate-Cut Bets Keep Bulls Hopeful

Dollar Strength Caps Gold’s Rally

Gold prices edged lower on Monday, pausing after a strong run that pushed the metal to its highest level in nearly two weeks. The decline came as the U.S. dollar firmed, making gold more expensive for holders of other currencies and tempering fresh buying interest.

Spot gold slipped 0.1% to $3,367.86 per ounce, while U.S. gold futures fell 0.2% to $3,412.50.

Fed Expectations Still Provide a Floor

Despite the pullback, gold remains supported by shifting expectations for U.S. monetary policy. Markets now see an 87% probability of a Federal Reserve rate cut in September, up sharply from earlier this month. Lower interest rates reduce the opportunity cost of holding non-yielding assets like bullion, giving investors reason to stay constructive on gold.

Analysts Eye Key Support Levels

Market strategists point to $3,350 per ounce as a critical support zone in the near term. If prices hold above that threshold, sentiment could remain positive, particularly if incoming U.S. inflation and labor data reinforce the case for Fed easing.

On the upside, momentum traders highlight resistance around $3,400–$3,420, a level gold needs to clear decisively to extend gains.

Why This Matters

Gold has become a focal point for investors seeking both inflation protection and a hedge against economic uncertainty. While the stronger dollar has slowed its momentum, the prospect of lower U.S. interest rates could keep demand resilient.

In short: gold’s rally may have paused, but the fundamentals still suggest that the metal’s shine isn’t fading just yet.