The U.S. dollar index slipped 0.3%, making gold cheaper for holders of other currencies. This decline followed weaker-than-expected U.S. GDP data, which intensified bets on upcoming Fed rate cuts. Carlo Alberto De Casa, an external analyst at Swissquote, said that the slowing dollar is reinforcing gold’s appeal, especially as inflation and geopolitical tensions remain in play.

Fed Meeting Eyed for Rate Clarity

While the Federal Reserve is expected to keep rates unchanged at Wednesday’s meeting, traders will be closely watching the updated economic projections and speeches from Fed officials for clues on the timing and scale of potential rate cuts. Political pressure continues, with President Trump reiterating his call for the Fed to ease monetary policy, though confirming Jerome Powell will remain Fed Chair through 2026.

Supportive Backdrop for Gold Bulls

Gold continues to benefit from its role as a non-yielding hedge during periods of inflation risk and policy uncertainty. Trump’s remarks on active trade talks with multiple countries, including China, add another layer of support for gold’s safe-haven demand.

Goldman Sachs remains bullish, pointing to strong central bank gold purchases, a slowdown in Chinese solar production, and elevated U.S. recession risk as factors likely to keep gold outperforming silver in the near term.

Gold Prices Forecast: Bullish Momentum Toward $3500