Gold News: Gold Price Rally Gains Steam as Fed Easing and Weak Dollar Boost Bulls

Gold Prices Surge Toward Record as Fed Rate Cut Bets and Weak Dollar Fuel Rally

Gold (XAU/USD) started the week with a sharp rally, surging to $3,489.85 during Monday’s session, coming within striking distance of its all-time high at $3,500.20. A breakout above this key resistance could trigger a technical run toward the swing chart target at $3,879.64 by September 23. However, with the U.S. markets closed for the Labor Day holiday and lighter trading volumes, some caution is warranted.

At 11:18 GMT, XAU/USD is trading $3470.91, up $23.48 or +0.68%.

Fed Rate Cut Bets Lift Gold and Silver Prices

Expectations of a Federal Reserve rate cut this month are giving gold a solid boost. San Francisco Fed President Mary Daly reiterated her support for easing, citing labor market risks. Meanwhile, the personal consumption expenditures (PCE) price index — the Fed’s preferred inflation gauge — rose 0.2% MoM and 2.6% YoY, in line with estimates. This has bolstered market confidence that the Fed could resume rate cuts as soon as this month.

Money markets are now pricing in a 90% chance of a 25 basis point rate cut in September, with over 100 bps of easing by autumn 2026, according to CME FedWatch. Non-yielding assets like gold tend to benefit in a low-rate environment, and silver followed suit, climbing above $40 for the first time since 2011.

Dollar Slips to 5-Week Low, Strengthens Bullion Appeal

The U.S. Dollar Index (DXY) slipped 0.25% to 97.606, hitting its lowest since late July. A weaker dollar makes gold cheaper for foreign buyers, increasing demand. The greenback has been weighed down by softening U.S. economic data and growing concerns over Fed independence, as political tensions rise over President Trump’s attempts to influence monetary policy.

Investors are watching Friday’s nonfarm payrolls report closely. August job gains are expected at 78,000, up slightly from July’s 73,000. Softer labor data could solidify the case for Fed easing, reinforcing the bullish momentum in gold.

Is Gold Overbought in the Short Term?

Despite the strong rally, gold is now up $178.29 over the past eight sessions and has closed higher five days in a row. The metal is trading $138.15 above its 50-day moving average, and while this isn’t extreme, it’s worth noting that at the previous peak in April, the spread was $543.64. Traders may want to consider whether to chase the rally or wait for a pullback to re-enter.

Gold Prices Forecast: Bullish Above $3,500 With Eyes on $3,879.64 by September 23

Momentum remains firmly bullish, underpinned by dovish Fed expectations, a softening dollar, and geopolitical uncertainty.

If XAU/USD breaks cleanly above $3,500.20, a continuation toward $3,879.64 looks increasingly viable by September 23.

However, short-term overheating and holiday-thinned liquidity may temporarily stall the advance. Still, as long as the Fed pivot narrative holds, gold prices are likely to stay bid.

More Information in our Economic Calendar.