Gold Price Forecast: XAU/USD Holds $3,373 as Fed Signals Push Bullish Breakout

Gold Price (XAU/USD) Pushes Higher on Fed Signals, Central Bank Demand, and Technical Breakouts

The gold market entered the final stretch of August with renewed bullish momentum, as spot gold (XAU/USD) closed the week at $3,373.89 per ounce, while U.S. gold futures settled even stronger at $3,418.50. The move was powered by dovish language from Federal Reserve Chair Jerome Powell at the Jackson Hole symposium, where he emphasized that risks are tilting toward softer growth and possible rate cuts in September. The probability of a 25 basis point cut surged to 85%, up from 75% just hours before Powell’s speech, according to CME FedWatch. That pivot translated immediately into a weaker U.S. dollar, down roughly 1% on the day, which amplified demand for non-yielding safe havens like gold.

XAU/USD Gains Momentum as U.S. Dollar Retreats

The dollar’s sharp decline opened the door for gold to extend its breakout, and the correlation was direct. As yields on the 10-year U.S. Treasury eased to 4.26%, traders rotated capital into metals, lifting gold alongside silver, which spiked 2.2% to $39.01, while platinum and palladium registered firm gains. The RSI on gold rose to 66, showing bullish momentum without flashing overbought, while the MACD printed a bullish crossover, confirming the strength of the rally. Volume supported the upside, with conviction buying accelerating on the breakout above $3,342, where the 50-period SMA had capped previous attempts.

Gold Price Range Breakout and Key Technical Levels

For much of the prior week, gold had consolidated in a triangular range between $3,313 and $3,378. Friday’s breakout candle marked a decisive shift from indecision to conviction. Traders are now eyeing the $3,405 resistance, followed by $3,433, which capped the July advance. Support lies at $3,351–$3,342, the breakout zone, with the next critical floor at $3,313. A daily close above $3,378 solidifies the bullish setup, with targets extending toward $3,500 in the medium term. If gold fails to hold above $3,313, however, momentum could reverse back to sellers, with $3,250 the next defensive line.

Macro Data and Policy Context Strengthen Gold’s Hedge Appeal

U.S. economic data last week painted a mixed picture. Jobless claims climbed to 235,000, the fastest rise in nearly three months, underscoring cracks in the labor market. Meanwhile, PMI readings surprised to the upside, and housing remains soft, pointing to a fragile growth environment. Powell’s acknowledgment of “shifting risks” was a direct nod to balancing full employment with price stability, a comment that markets interpreted as a green light for rate easing. Against this backdrop, gold’s safe-haven function remains intact, especially with upcoming catalysts like U.S. GDP (forecast 3.1% vs. prior 3.0%) and Core PCE inflation (expected +0.3%) set to shape Fed timing. Stronger growth could temporarily weigh on gold by reducing cut expectations, while weaker numbers may accelerate flows into XAU/USD.

Central Bank Accumulation Magnifies Price Moves

Beyond the Fed, one of the strongest structural drivers for gold remains central bank accumulation. Goldman Sachs estimates that 100 tonnes of net central bank purchases translate into a 1.7% rise in gold prices. With global mine output relatively stable and inelastic, flows from conviction buyers like ETFs, sovereigns, and speculators are disproportionately impactful. Emerging-market central banks have been particularly aggressive buyers since the freezing of Russian reserves in 2022, a shift that redefined gold as the “unfreezable reserve asset.” This sovereign accumulation has offset ETF outflows at times, anchoring support under gold even during corrective phases.

Global Demand and Seasonal Flows in Asia

Physical demand has shown regional divergences. In India, jewelers resumed restocking ahead of festival season, while demand in China has been tempered by volatility in yuan-denominated prices. Still, Asian retail demand typically reinforces support zones, cushioning pullbacks when Western paper markets trigger liquidations. With total global demand surpassing 4,900 tonnes in 2023, and central banks adding over 1,000 tonnes to reserves, the underlying bid remains firm even when speculative activity fluctuates.

Political Risks Amplify the Safe-Haven Trade

The geopolitical layer cannot be overlooked. Domestically, President Donald Trump has intensified political pressure on the Fed, even threatening to dismiss Governor Lisa Cook, an unusual intervention that highlights institutional strain. Abroad, escalating tensions between Russia and Ukraine, particularly Putin’s demand for full control of Donbas and rejection of NATO expansion, remind investors of the enduring geopolitical hedge value of gold. Historically, such periods of uncertainty push gold well beyond fair-value models, as buyers seek refuge in the only globally liquid asset outside sovereign control.

Investor Positioning and Technical Setup

Gold’s latest move has traders zeroed in on clear inflection points. The wide-bodied bullish candle carved out on Friday at $3,342 signaled a break from weeks of hesitation, shifting sentiment firmly back to the buyers. Momentum gauges back that shift: the RSI is climbing without yet being stretched, and the MACD has swung positive, underscoring strength behind the move. Positioning now favors buying into pullbacks around the breakout zone of $3,351–$3,342, with $3,313 marked as the line that would invalidate the setup. Upside targets are well defined at $3,405 and $3,433, where supply capped previous rallies. ETF flows remain soft, with modest outflows persisting, but the scale of central-bank and sovereign accumulation still sets the tone—big, conviction buyers are dictating direction even when shorter-term sentiment looks uneven.

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