Gold's Rate Cut Rally: Will the Fed Play Along?

Gold showed a minor jump on rate cut hopes. It hit an all-time high at $3057 and is currently trading around $3035

Fed Holds Steady, Cites Economic Uncertainties

The Federal Reserve, in its March 19, 2025 session, held interest rates steady at 4.25% to 4.50%, following the late 2024 rate cuts. Despite its positive outlook on the economy, the Fed acknowledged increasing economic uncertainties, especially those resulting from tariffs and inflation related to the Trump administration's policies. The central bank is also issuing a warning of caution, reducing its GDP growth projection to 1.7% and increasing its inflation target to 2.7% for the year.

While remaining stable for the time being, the Fed expects two quarter-point reductions in interest rates later in 2025. There is no consensus among policymakers regarding the timing and number of possible reductions. The market response to the news has been positive, as investors welcome their expectations of the positive impact rate cuts would have on economic performance.

Rate Pause Expectations Rise 

According to the CME Fed Watch tool, the chances of a rate pause in the May 19th, 2025 meeting have increased to 89.70% from 85.10% a week ago.

Technical Analysis: Key Levels and Trading Strategy

Gold prices are holding above short-term moving averages 34 EMA and 55 EMA and above long-term moving averages (200 EMA) in the 4-hour chart. Immediate support is at $2995 and a break below this level will drag the yellow metal to $2985/$2956/$2920/$2900/$2880. The near-term resistance is at $3080 (trend line joining $2450 and $2790) with potential price targets at $3100.

It  is good to sell on rallies around $3048-50  with a stop-loss  at $3080 for a target price of $2835.