Gold Price Forecast: XAU/USD edges lower below $3,650 on stronger US Dollar, profit-taking

• The Gold price drifts lower to around $3,640 in Friday’s early Asian session.

• Fed decided to cut rates by 25 bps while signaling two more reductions this year.

• Rising geopolitical tensions in the Middle East could boost the safe-haven flows, supporting the Gold price. 

The Gold price (XAU/USD) trades in negative territory for the second consecutive day near $3,640 during the early Asian session on Friday. The precious metal edges lower after reaching a record high in the previous session due to some profit-taking and a firmer US Dollar (USD). 

On Wednesday, the US Federal Reserve (Fed) cut the interest rates by 25 basis points (bps) and signaled two more reductions by the end of this year. This is the Fed's first reduction this year and puts the target range for its main lending rate at 4.0% - 4.25%. 

Fed Chair Jerome Powell indicated that the latest move to lower interest rates was a risk management cut and added that he doesn't feel the need to move quickly on rates. A less dovish stance from the US central bank provides some support to the Greenback and weighs on the USD-denominated commodity price in the near term. 

"Investors judged the Fed's guidance less dovish than anticipated," said MUFG analyst Soojin Kim. "Chair Powell highlighted tariff-driven inflation risks and stressed a 'meeting-by-meeting' approach to further cuts, sending the dollar higher," Kim added. 

On the other hand, escalating geopolitical tensions in the Middle East could boost the yellow metal, a traditional safe-haven asset. Israeli media reports indicated the military is preparing for a major ground incursion into Gaza City. For weeks, Israel has been laying the groundwork for such an operation, urging civilians to evacuate to designated humanitarian areas like Al-Mawasi.