Gold prices have declined but remain close to all-time highs as traders—encouraged by upbeat US economic data and noting diverging opinions among Federal Reserve officials this week—have reassessed their expectations for future monetary policy.

Gold slipped to nearly $3,719 per ounce, down $70 from the record set on Tuesday. Prices dropped on Wednesday after data showed US new home sales in August unexpectedly rose to their fastest pace since early 2022, easing some concerns about a slowdown in the world's largest economy. The dollar climbed to its highest level in almost two weeks, making gold more expensive for most buyers.

Traders also weighed comments from US officials. On Wednesday, Treasury Secretary Scott Bessent voiced disappointment that Fed Chair Jerome Powell did not lay out a clear plan for rate cuts. Earlier in the week, the Fed Chair reiterated the need for caution amid signs of labor market weakness and the risk of rising inflation. Rate cuts typically support precious metals, which do not yield interest.

Furthermore, the dynamics of supply and demand remain critical factors. Reduced gold production in some regions and increased demand from central banks—especially in developing markets—have put upward pressure on prices. Central banks are using gold to diversify reserves and reduce reliance on the US dollar. This trend is likely to persist in the long term, supporting fundamental demand for gold.

It's no surprise that gold and silver have become some of the most popular commodities this year, thanks to a range of favorable factors—including last week's Fed rate cut and robust demand from central banks. On Tuesday, prices jumped 1.2%, reaching a peak of $3,791.10 per ounce, following market rumors about China planning to become a custodian for foreign sovereign reserves in precious metals.

Bullion demand has also been strong from exchange-traded funds (ETFs), whose inflows reached a three-year high last Friday.

As for the current technical picture, buyers need to take out the nearest resistance at $3,756. This would open the way to $3,802, above which it will be quite difficult to advance. The furthest target is in the $3,849 area. In the event of a gold decline, bears will aim to seize control at $3,705. If successful, breaking below this range would deal a serious blow to the bulls and push gold toward a low of $3,658, with the prospect of a slide to $3,600.