Gold prices retreated from an all-time peak of $2,450 per ounce hit earlier this week, as the U.S. dollar regained some ground and Federal Reserve officials maintained a hawkish stance, tempering expectations of an imminent rate cut. The precious metal traded at $2,418, down 0.28% after reaching a high of $2,433 on Tuesday.

Wall Street Rally Caps Gold's Safe-Haven Demand

The pullback in gold prices came despite a decline in U.S. Treasury yields, as buoyant equity markets limited the metal’s safe-haven appeal. With Wall Street indices firmly in the green, investors seemed reluctant to book profits from the rallying stock market to seek refuge in the precious metal.

Fed Officials Push Back Against Dovish Policy Pivot

Contributing to gold’s retreat were comments from several Fed officials who expressed caution over signaling rate cuts too soon. Atlanta Fed President Raphael Bostic stated he’s “not in a hurry” to reduce rates, emphasizing inflation remains the central bank’s top priority.

Fed Governor Christopher Waller acknowledged progress on inflation but said he needs to see several more favorable readings before supporting a pivot. Vice Chairs Philip Jefferson and Michael Barr also struck hawkish tones, emphasizing the need to keep policy restrictive until inflation is firmly under control.

Hedge Funds Boost Bullish Gold Bets Despite Rate Uncertainty

Despite the Fed’s wary stance, data from the Commodity Futures Trading Commission (CFTC) showed hedge funds boosted bullish bets on gold futures to a three-week high in the week ending May 14. This suggests investors are still positioning for potential rate cuts later this year, should inflation continue moderating.

Technical Outlook: Pullback Risks if $2,400 Breached

Technically, gold’s broader uptrend remains intact, but a daily close below $2,407 could pave the way for a deeper pullback, with the next support level at $2,400. Momentum indicators like the RSI are showing signs of cooling, adding to downside risks. However, a break above $2,431 could reignite the rally towards the fresh record peak of $2,450.

As the tussle between Fed policy expectations and global uncertainties plays out, gold’s price action remains volatile. While the recent retreat has cooled the rally for now, the metal’s safe-haven status could drive further gains if economic conditions deteriorate or inflation persists at elevated levels.