Gold News: Fed Dovish Tilt and ETF Inflows Set Tone for Gold Market This Week

Gold Breaks Out as Fed Rate Cut Bets Surge, Eyes Turn to $3500

Gold surged through major resistance levels last week as markets priced in a near-certain September rate cut from the Federal Reserve, fueling strong bullish momentum. XAU/USD closed at $3447.44 on Friday, up 2.26% for the week and 4.78% for August—its best monthly performance since April.

PCE Data Triggers Rally, Confirms Fed Dovish Tilt

Friday’s U.S. inflation data matched expectations, showing a 0.2% monthly rise in the PCE price index and a 2.6% year-over-year increase. While core PCE edged up to 2.9%, markets took the print as benign. Traders responded by ramping up bets on a 25 bps rate cut at the Fed’s September meeting, pushing odds to nearly 89%, up from 63% at the start of August. The result: gold vaulted above key resistance at $3439.04 and $3451.53, with the all-time high at $3500.20 now firmly in play.

Dollar Weakness and ETF Inflows Reinforce Bullish Outlook

The U.S. Dollar Index shed 2.19% in August, closing at 97.855 and remaining below its 50-day moving average near 98.000. This dollar softness, alongside declining short-term Treasury yields, has provided solid tailwinds for gold. Additionally, gold ETFs saw inflows of nearly 15 tons in just two sessions last week, underscoring renewed institutional demand.

Fed Independence in Question as Political Risk Creeps In

President Trump’s attempts to oust Fed Governor Lisa Cook have cast a shadow over central bank independence. While legal action is pending, the incident has introduced another layer of uncertainty into monetary policy projections. Trump’s suggestion that he’ll soon hold a majority on the Fed board raises concerns that policy could become more politically driven. For now, this uncertainty is modestly supporting gold as a hedge against credibility risk.

Weekly Gold Technicals Suggest $3500.20 Is Within Reach

With gold clearing main tops at $3409.43, $3439.04, and $3451.53, the door is now open for a test of the all-time high at $3500.20. Weekly technicals show solid bullish structure, with no meaningful resistance until that record level. On the downside, initial support is seen at $3310.48, the 50% retracement of the $3500.20 to $3120.76 range. Below that, deeper support is stacked at $3268.12, $3244.41 and $3120.76.

Gold Prices Forecast: Bullish Outlook with $3500.20 in Sight

The path of least resistance remains higher. As long as gold holds above the $3310.48 retracement level, dip-buyers will stay engaged. With Fed policy leaning dovish, a soft dollar, and political risk rising, gold remains well-positioned to challenge $3500.20. Traders should stay long on pullbacks with a close eye on $3500.20 as a breakout level.

More Information in our Economic Calendar.