Gold Price Forecast: Fed Cuts in Focus, XAU/USD Stays Near $3,586

Gold Price Forecast: XAU/USD Pushes Toward $3,600 as Fed Cuts Loom

Gold (XAU/USD) is trading at unprecedented levels, with spot prices holding near $3,586 per ounce and futures climbing above $3,650, as a combination of weak U.S. data, dovish Federal Reserve expectations, and sustained central bank demand intensify the momentum. The rally has already delivered a 36% gain year-to-date, and in just the first week of September, gold added another 4%, setting the stage for a potential test of $4,000 before year-end.

Record Surge Fueled by Weak U.S. Labor Data and Fed Bets

The August Nonfarm Payrolls data shocked markets with only 22,000 jobs added versus expectations of 75,000, alongside a rise in unemployment to 4.3%, the highest since 2021. Jobless claims also ticked up to 237,000. This softening in the labor market sent Treasury yields tumbling and the U.S. Dollar Index down to 97.70, pushing gold sharply higher as investors positioned for a 25-basis point rate cut on September 17, with rising speculation of a 50-basis point move. The CME FedWatch tool now prices a 99.4% probability of easing at the next FOMC meeting.

Technical Drivers Keep Bulls in Control

The chart structure reinforces bullish conviction. On the daily timeframe, gold rebounded strongly from the 100-week SMA, while the 20-month SMA underpins long-term support. Spot gold has repeatedly defended the $3,500 level, transforming it into a new base of support. Futures prices confirm the bullish outlook, closing at $3,653.30 per ounce, just off record highs. Analysts now see a clear path toward $3,800 in Q4, with the $4,000 threshold possible if dovish central bank policy aligns with strong seasonal demand.

Demand Trends: ETFs, Central Banks, and Asia’s Pause

While futures and ETFs are driving speculative flows, physical demand in Asia shows hesitation. Buyers in India and China have pulled back above $3,550, signaling some sticker shock at these record levels. Yet, global ETFs saw $5.5 billion in inflows in August, reinforcing institutional appetite. Central banks remain active, with purchases exceeding 1,000 tons in 2024 and another large wave expected this year. China’s upcoming reserve update could further validate the official-sector accumulation trend.

Domestic Markets in India and UAE Reflect Global Rally

In India, 24-carat gold has surged to ₹108,490 per 10 grams, while 22-carat trades near ₹99,450 per 10 grams. On the MCX, October futures settled at ₹107,740 per 10 grams, marking another record close. Festive season demand from Navratri to Diwali is expected to amplify local consumption and keep premiums high. In the UAE, 22K gold stands at Dh400 per gram, the highest in history, with spot prices at $3,586 per ounce, underscoring the squeeze on consumers but also reaffirming gold’s role as a long-term store of value.

Key Events to Watch: Inflation Data and ECB Meeting

The next drivers will be U.S. inflation reports. The PPI and CPI prints could either confirm disinflation trends or reignite fears of sticky price pressures. Core CPI, particularly shelter and services, remains crucial for Fed policy. Meanwhile, the European Central Bank faces its own dilemma of slowing growth against persistent inflation. Any dovish tilt could reinforce global liquidity conditions favorable for gold. The University of Michigan sentiment and inflation expectations survey will also be closely monitored for shifts in household outlook, potentially adding volatility.

Profit-Taking Risks Amid Overbought Levels

Despite the bullish backdrop, analysts caution about potential near-term profit-taking. On the Comex, December gold hit $3,655.50 per ounce before easing slightly, reflecting resistance at new peaks. Technical indicators place gold in an overbought zone, raising the probability of corrective pullbacks toward $3,500–$3,520. However, market consensus suggests that dips will be used as buying opportunities given geopolitical tensions, Fed easing bets, and festive demand.

Macro, Geopolitical, and Seasonal Tailwinds

Gold’s rally is underpinned not only by central bank policy but also by global geopolitical risks. Trade frictions between the U.S. and major economies, ongoing conflicts, and political instability are reinforcing safe-haven flows. Seasonal drivers, particularly strong Indian demand in Q4, add another layer of support. With ETFs, central banks, and retail buyers aligned, the yellow metal is positioned for sustained strength into the final months of 2025.

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