Gold rebounds above $4,000 as softer US data, Warsh remarks weigh on US Dollar

• Gold rebounds above the $4,000 mark as the US Dollar eases on Fed Chair Warsh's remarks.
• ADP private payrolls miss forecasts ahead of Thursday's Nonfarm Payrolls report.
• Technical indicators point to persistent downside momentum despite oversold conditions.

Gold (XAU/USD) advances above the $4,000 psychological mark on Wednesday as the US Dollar (USD) eases following remarks from Federal Reserve (Fed) Chair Kevin Warsh and softer-than-expected US economic data.

However, hawkish Fed expectations keep the upside limited, with traders still pricing in the possibility of a rate hike later this year. At the time of writing, XAU/USD is trading around $4,097, recovering from the seven-month low of $3,941 touched on Tuesday.

Speaking at the ECB Forum in Sintra on Wednesday, Warsh said, "We're not going to give forward guidance," adding, "We'll chart a new course so we can make better decisions." He also noted that "inflation risks have come down."

On the data front, ADP Employment Change showed that private payrolls increased by 98K in June, below the market expectation of 113k and down from the 122K increase recorded in May. The ISM Manufacturing Purchasing Managers Index (PMI) eased to 53.3 in June from 54.0 in May, missing market forecasts of 54.0.

Traders now await the US Nonfarm Payrolls (NFP) report, due on Thursday.

Gold's glitter has faded over the past few months, posting its steepest quarterly decline since 2013 on Tuesday. The precious metal is now trading around 28% below its all-time high near $5,600 set in January.

The correction follows a powerful two-year rally, including a 67% gain in 2025, driven by strong central bank buying, robust ETF inflows, geopolitical tensions and Fed interest rate cuts.

However, in 2026, the bull run appears to have stalled, with the primary driver of the sell-off being a sharp shift in interest rate expectations. Earlier this year, traders were pricing in at least two Fed rate cuts before the US-Iran war triggered an energy-driven inflation shock, pushing US inflation to more than double the Fed's 2% target.

That forced traders to reassess the Fed's monetary policy outlook, with markets currently pricing in a 67% probability of a rate hike at the September meeting, according to the CME FedWatch Tool.

As a non-yielding asset, Gold tends to perform well in a low-interest-rate environment because lower borrowing costs reduce the opportunity cost of holding the precious metal.

Meanwhile, weak physical demand from India, one of the world's largest Gold consumers, is also weighing on prices. According to the India Bullion & Jewellers Association (IBJA), Indian households sold nearly 50 tonnes of old Gold during the April-June quarter, a 43% increase from a year earlier, as consumers locked in profits at elevated prices. Demand has also been pressured by the Indian government's decision to raise the customs duty on Gold from 6% to 15% in May.

On the geopolitical front, progress toward a final US-Iran peace agreement remains slow. Although US and Iranian envoys have arrived in Doha, Qatar, no direct talks between the two sides are scheduled.

Technical Analysis: XAU/USD risks deeper losses below $4,000 support

On the daily chart, the metal holds below the 20-day Simple Moving Average from the Bollinger Bands at around $4,184, keeping the near-term tone mildly bearish, while the price still trades comfortably above the lower band at about $3,926.

The Relative Strength Index (RSI) near 40 and a negative Moving Average Convergence Divergence (MACD) both suggest subdued upside momentum, reinforcing the idea that rallies are likely to face selling pressure rather than mark a sustained trend reversal.

On the topside, initial resistance emerges at the Bollinger midline near $4,184.59, with the next cap at the horizontal barrier around $4,300, ahead of the upper Bollinger band clustered near $4,442.

On the downside, immediate support is seen at the lower Bollinger band around $3,926, with a more significant floor at the previously drawn horizontal level near $3,800.00, where buyers would be expected to defend the broader uptrend if the current pullback deepens.

(The technical analysis of this story was written with the help of an AI tool.)