Gold Price Forecast: XAU/USD Eyes $3,879 With Fed Rate Cut and ETF Flows in Focus

Gold Price Analysis: XAU/USD Consolidates at $3,643 With Fed Rate Cut in Focus

XAU/USD Holds Near Record Highs

Gold (XAU/USD) ended the week at $3,643.09, climbing more than 1.5% as markets positioned for a Federal Reserve rate cut at the September 17 meeting. The rally has stretched into a fourth straight weekly gain, with price action consistently defending support levels after a breakout above the $3,500 zone. This level now acts as a strong floor. Technical support also sits at $3,311.56, with the 52-week moving average at $3,025.64 anchoring longer-term structure.

Fed Expectations and Labor Market Weakness

Markets are assigning a 94% probability of a 25bp cut next week, with a smaller chance of 50bp. Jobless claims surged to 263,000, the highest in nearly four years, and the Bureau of Labor Statistics admitted to an overcount of 911,000 jobs between April 2024 and March 2025. Nonfarm payrolls in August showed just 22,000 new jobs, underscoring the softening labor backdrop. These cracks outweigh the stickiness of inflation, where August CPI rose 0.4% month-over-month and 2.9% year-over-year, slightly hotter than forecasts.

Persistent Inflation Versus Dovish Fed Tilt

Inflation remains elevated with core CPI steady at 3.1%, but markets are discounting short-term price pressures in favor of the Fed’s likely dovish pivot. Traders are betting that weaker employment data will dominate the FOMC narrative, especially as real yields turn lower. Gold’s safe-haven bid strengthens when yields compress, and this dynamic is central to the current rally.

Central Bank Demand and ETF Flows

Beyond macro policy, structural demand remains robust. The People’s Bank of China continues to accumulate reserves, signaling sustained sovereign appetite. Beijing has also simplified gold import and export rules, which could lift trading volumes. Institutional flows into gold-backed ETFs have resumed after a brief summer pause, with holdings rising steadily since mid-August. These inflows mirror a broader theme: portfolio managers diversifying against recession risk.

Technical Path Toward $3,879

The breakout above $3,500.20 set the stage for a September projection toward $3,879.64 based on swing chart extensions. Resistance lies at $3,666, $3,730, and $3,782, where overbought conditions could spark short-term pauses. Still, momentum remains intact, with bulls defending every retracement. The RSI has normalized from extreme levels, suggesting energy remains for another push higher. If momentum persists, the breakout zone could accelerate gains into the $3,850–$3,880 range before quarter-end.

Macro Events Ahead for Gold Traders

Traders now turn to the FOMC meeting, but several U.S. data points remain on the radar. Retail sales, the Empire State Manufacturing Index, and jobless claims later this week will all inform growth expectations. Any further deterioration in labor indicators will add conviction to the gold rally, while stronger-than-expected consumer data could briefly strengthen the dollar and cap bullion.

Link Between Gold and Bitcoin

The coupling between gold and Bitcoin has strengthened in 2025. When gold surged past $3,500 in April, Bitcoin followed two months later, peaking at $124,457. Both assets are now consolidating while awaiting Fed guidance. The correlation highlights gold’s continued role as the lead indicator in liquidity-driven rallies.

Verdict on XAU/USD

Verdict: BUY — With XAU/USD holding $3,643 into the Fed meeting, the combination of weak labor data, ETF inflows, and central bank demand supports a bullish continuation. The probability of a breakout toward $3,879 remains high, with support anchored at $3,500 and major downside invalidation only at $3,311. If the Fed confirms easing, gold is positioned for another leg higher into Q4 2025.

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