Market participants currently see a 65% chance of a 50 basis point cut in the upcoming Federal Open Market Committee (FOMC) meeting, weakening the dollar and increasing demand for non-yielding assets like gold.

The US economy showed mixed signals, with retail sales in August rising 0.1%, marginally better than the expected 0.2% decline. While this initially caused a brief dollar rally, the momentum faded as dovish expectations surrounding the Federal Reserve persisted.

In the bond market, the 10-year US Treasury yield rebounded from a 16-month low, which limited the dollar's recovery but kept gold prices steady.

Looking ahead, traders are keenly awaiting the Fed's 'dot plot' and economic projections for clearer guidance. These could provide fresh insights into the Fed's stance on future rate hikes or cuts, which will likely be pivotal for both gold prices and the US dollar.

In addition to the economic factors, geopolitical tensions continue to bolster demand for gold as a safe-haven asset. Recent events in the Middle East and rising global uncertainty have contributed to the metal's appeal, as investors seek protection from potential market instability.

As the markets await the outcome of the upcoming FOMC meeting, both rate cut expectations and global tensions are likely to keep gold trading near elevated levels in the near term.

Gold prices hover around $2,575, supported by Fed rate cut expectations. Key resistance remains at $2,585; a break above this level could reignite bullish momentum.