Gold Price Forecast – Fed Cuts Driving Momentum , XAU/USD Near $3,600

Gold Price Forecast as XAU/USD Approaches $3,600 With Fed Bets Driving Record Highs

The gold price (XAU/USD) has exploded to fresh records, touching $3,597.80 per ounce in spot trading and briefly surpassing its previous peak of $3,578.66 earlier this week. Futures contracts advanced above $3,650 for the first time, signaling that bullish momentum is far from exhausted. From the start of 2025, gold has now surged more than 36% year-to-date and is on track for a weekly gain of roughly 4%, supported by an increasingly dovish Federal Reserve outlook and deteriorating labor data in the U.S. economy.

Labor Market Weakness Reinforces Fed Rate-Cut Bets

The rally accelerated after the August nonfarm payrolls report showed the U.S. economy added only 22,000 jobs, far short of consensus expectations of 75,000. The unemployment rate climbed to 4.3%, its highest since 2021, while weekly jobless claims rose by 8,000 to 237,000, confirming the slowdown. Markets immediately priced in aggressive policy easing, with CME FedWatch indicating a 97.6% probability of a 25-basis-point cut at the Fed’s September 17 meeting and growing speculation of a larger 50-basis-point reduction. A softer dollar accompanied the data, with the DXY sliding to 98.00, down 0.25%, while Treasury yields dropped across the curve, enhancing gold’s relative appeal as a non-yielding asset.

Fed Credibility, Trump Pressure and Political Risk Factor Into Gold’s Strength

The political backdrop adds another dimension. President Donald Trump’s repeated attacks on Fed Chair Jerome Powell and efforts to remove Fed Governor Lisa Cook have raised concerns over the central bank’s independence. Analysts warn that if political interference escalates, investor confidence in U.S. monetary credibility could collapse. Goldman Sachs has even suggested that under these conditions, gold could climb as high as $5,000 per ounce, particularly if monetary policy becomes increasingly dictated by the White House. Such fears reinforce gold’s role as a hedge not just against inflation or currency debasement but against institutional risk.

Technical Outlook: Key Levels in XAU/USD

Technically, gold’s chart remains firmly bullish. The breakout from a symmetrical triangle pattern on the daily timeframe cleared long-term resistance, sending XAU/USD through the $3,578.66 barrier. Immediate resistance now sits at the round $3,600 handle, with bullish targets extending toward $3,879.64 by late September if momentum continues. On the downside, $3,500.20 serves as crucial support, aligning with the 20-day exponential moving average at $3,436.70. RSI readings near 75 suggest overbought conditions, which could trigger corrective pullbacks, but the broader trend remains intact above the 50-day moving average at $3,370.40.

Comparisons With Other Asset Classes Show Gold’s Dominance

Relative to other assets, gold has massively outperformed. Since December, gold has climbed 30%, while Bitcoin (BTC-USD) has gained only 8%, despite reaching record highs earlier in the year. Equities have struggled, with the S&P 500 giving back intraday records and the Dow Jones retreating on labor concerns. The divergence highlights gold’s resilience as a macro hedge. Demand is also visible in retail channels—gold bars and coins at retailers like Costco (COST) continue selling out rapidly, underlining how mainstream consumer interest has aligned with institutional flows.

Central Bank Demand and Safe-Haven Flows Remain Critical

Beyond speculative positioning, gold is being underpinned by steady central bank accumulation and heightened geopolitical uncertainty. Mounting risks from trade disputes, U.S. fiscal imbalances, and shifting tariff policies have kept sovereign buyers engaged, while geopolitical flashpoints maintain steady haven flows. Historical precedent supports this trend: during the 2009–2011 cycle, gold surged before a decade-long plateau. Now, with debt burdens higher and fiscal policy uncertain, conditions may be aligning for another prolonged upcycle.

Outlook for XAU/USD

As long as XAU/USD holds above $3,500, the bullish case remains dominant, with the possibility of short-term corrections on profit-taking. The next decisive test lies in reclaiming and holding $3,600, which would open the pathway to $3,879.64 in the weeks ahead. A failure to defend $3,500 could spark a retracement toward $3,445–$3,413, where long-term buyers are expected to re-enter.

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