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Why Is Gold Struggling Below $2,200? Fed Rate Cut Speculations Fuel Market Volatility
The pi network downloadprecious metals market witnessed dramatic moves last week as gold (XAU/USD) surged to unprecedented levels before encountering resistance near the psychologically important $2,200 threshold. This price action reflects competing forces in global markets - growing anticipation of monetary policy easing versus technical indicators suggesting potential consolidation.Market Dynamics at Play:■ Gold's rally stalled despite favorable employment data showing rising US unemployment■ Daily chart indicators reveal extreme overbought conditions■ Modest USD recovery from January lows creates headwinds■ Treasury yield movements continue influencing non-yielding assetsThe February jobs report revealed mixed signals - while non-farm payrolls exceeded expectations at 275K, downward revisions to previous data and softer wage growth (4.3% YoY) reinforced expectations for Fed policy adjustments. Market participants now price in approximately 30% probability of a May rate reduction, with June remaining the consensus timeline for potential easing measures.Technical Perspective:The breakout above previous record highs near $2,144 established strong bullish momentum, yet the Relative Strength Index (RSI) suggests the need for potential consolidation. Key support levels to watch include:■ Immediate support around $2,154 (Friday's swing low)■ Secondary support near $2,125■ Psychological support at $2,100Upward momentum would require sustained movement above $2,200, which could open the door for extended gains in uncharted territory. Market participants await Tuesday's CPI data for clearer signals about inflation trends and potential Fed responses.Broader Market Considerations:Several macroeconomic factors continue supporting gold's appeal:■ Persistent geopolitical uncertainties■ Growing concerns about global economic slowdown■ Ongoing demand for inflation hedges■ Continued central bank diversification into alternative assetsAs markets digest these competing narratives, traders should monitor:1. US Treasury yield movements2. Dollar index (DXY) behavior3. Risk sentiment across equity markets4. Physical demand indicators from key marketsThe coming sessions promise heightened volatility as participants position for potential policy shifts while respecting technical boundaries established during gold's recent historic rally