Gold at a Crossroads (XAUUSD): Rate-Cut Hopes vs. Rising Yields

I believe the most influential factor at this stage is the monetary policy outlook of the Federal Reserve, as the trajectory of interest rates has become the decisive element in determining gold’s attractiveness. Historically, gold benefits from a low-interest-rate environment because it is a non-yielding asset, meaning the opportunity cost of holding it declines.

With expectations increasing that the Fed may shift toward policy easing later this year, this scenario, in my opinion, provides a solid support base for gold—even if short-term volatility persists. Markets tend to price in developments ahead of time, and any clear signal of a pivot toward easing could be sufficient to trigger a new upward wave.

However, the opposing impact of rising real yields cannot be overlooked, as I see it as the primary threat to gold’s continued advance in the near term. When bond yields rise, income-generating assets become more attractive compared to gold, redirecting part of investment flows away from the precious metal. In my assessment, this dynamic largely explains gold’s inability so far to secure a decisive breakout above recent resistance levels, despite ongoing geopolitical and economic support factors. Should yields continue climbing, we may witness a deeper technical correction before the broader uptrend resumes.

Conversely, ongoing geopolitical and global economic uncertainty continues to provide structural support for gold. In times of ambiguity, investors traditionally turn to gold as a store of value and safe haven. With persistent inflation risks, slowing global growth, and geopolitical tensions, structural demand for gold is likely to remain intact. In my view, this underlying demand will prevent any sharp collapse in prices, instead limiting downside moves and turning corrections into medium- to long-term repositioning opportunities.

The next decisive catalyst, in my opinion, will be upcoming U.S. inflation and labor market data. If these figures show clear signs of cooling, expectations for rate cuts would likely strengthen, potentially providing gold with the momentum needed to break above the 5100 level and enter a renewed bullish phase.

Conversely, if data continues to reflect economic strength, the Fed may delay easing, thereby prolonging pressure on gold. For this reason, I see the current phase as one of “pricing expectations” rather than pricing confirmed realities.

From a technical standpoint, gold’s ability to remain close to resistance without a clear breakdown reflects underlying strength rather than weakness. Strong markets typically consolidate before resuming their primary trend. This behavior suggests, in my view, that institutional investors are not exiting the market, but rather waiting for greater clarity before expanding their positions. A strong and sustained daily close above resistance could accelerate upside momentum through fresh inflows.

In my assessment, the most probable scenario over the coming months is continued short-term volatility accompanied by limited corrections, followed by a resumption of the medium-term uptrend. The broader direction of global monetary policy is gradually tilting toward easing, even if the timing remains uncertain.

With each step closer to rate cuts, gold’s fundamental support base strengthens. Therefore, I believe any potential pullback should be viewed as a healthy correction rather than the start of a prolonged bearish trend.

Ultimately, I do not see gold standing on the brink of collapse, but rather at the threshold of a transitional phase that will define its next major move. While rising yields and a strong dollar may exert temporary pressure, long-term fundamentals continue to favor the precious metal.

My view is that the market is currently undergoing a reassessment process, and a decisive breakout may only be a matter of time—particularly if easing expectations begin to materialize into actual policy shifts. Until then, gold is likely to remain within a critical range, yet it retains strong potential for a powerful advance once the right conditions align.