Gold prices paused their recent rally on Tuesday, with XAU/USD struggling to extend gains as overbought technical conditions and a modest recovery in the US dollar weighed on bullish momentum. After a strong run fueled by safe-haven demand and central bank expectations, traders took profits, leading to a pullback from recent highs.
The US dollar regained some footing, limiting further upside for gold, as Treasury yields ticked higher and investors adjusted their expectations for the Federal Reserve’s rate trajectory. Despite the greenback’s mild recovery, gold remained well-supported by underlying inflation concerns and continued geopolitical uncertainty.
Technical indicators suggested that gold had entered overbought territory, prompting short-term traders to lock in gains. The recent surge pushed prices to key resistance levels, making a temporary pause in the rally more likely as markets reassess their positioning.
Looking ahead, investors will monitor upcoming US inflation data and Federal Reserve commentary, which could determine gold’s next move. If economic data reinforces expectations of sticky inflation, gold may find renewed buying interest, while signs of cooling price pressures could give the US dollar more room to recover, pressuring XAU/USD further.
For now, gold remains in an uptrend, though profit-taking and shifting rate expectations may drive short-term volatility. A sustained break above recent highs could signal another leg up, while a deeper correction would test key support levels as traders weigh broader economic risks.
