Gold (XAUUSD) Price Forecast: Bullish Bias Builds on Fed Turmoil and Rate Cut Bets

Gold Prices Climb as Fed Independence Comes Under Fire from Trump

Gold prices rallied to a two-week high on Tuesday as traders responded to U.S. President Donald Trump’s abrupt and controversial move to remove Federal Reserve Governor Lisa Cook. The development raised alarm bells about the central bank’s independence, further supporting investor demand for safe-haven assets.

The spot price for gold rose 0.33% to $3,376.77 at the time of writing, breaking above the 50-day SMA at $3,346.20 and gaining bullish traction. The move comes after Trump cited alleged mortgage-related misconduct in firing Cook, a claim Cook denied. She also challenged the legality of her removal, stating she would not resign.

At 13:01 GMT, XAU/USD is trading $3372.01, up $6.29 or +0.19%.

Trump’s Fed Pressure Triggers Safe-Haven Inflows into Gold

The dismissal is widely seen as a political maneuver aimed at steering the Fed toward a more dovish stance. Analysts, including Swissquote’s Carlo Alberto De Casa, warned that this introduces deeper uncertainty around the Fed’s credibility and decision-making autonomy—conditions historically supportive of gold.

Bond markets also reacted sharply. The 2-year Treasury yield dropped 3 bps to 3.70%, while the 10-year yield held around 4.279% and the 30-year yield rose to 4.916%, steepening the yield curve. Traders are now betting on lower short-term rates but pricing in longer-term inflation risk, both favorable for non-yielding gold.

Fed Rate Cut Odds and Inflation Data in Focus

Adding to the bullish gold narrative, Fed Chair Jerome Powell hinted at a potential rate cut in September, citing softening labor market indicators, even as inflation remains a concern. Money markets are now pricing in an 82% chance of a 25 bps cut.

Investors are eyeing this Friday’s PCE price index data—seen as the Fed’s preferred inflation gauge—for confirmation. A cooler reading could solidify the rate-cut narrative and strengthen gold’s upside.

China’s Gold Demand Rebounds Sharply

On the demand side, China’s net gold imports via Hong Kong jumped 126.81% in July compared to June, according to Hong Kong Census data. This marked a major rebound in physical demand, offering further support to bullion.

Meanwhile, SPDR Gold Trust reported a 0.18% rise in holdings to 958.49 metric tons, reflecting renewed institutional interest.

Gold Prices Forecast: Bullish Bias Above Key Support

Technically, gold is holding above support at $3,353.58 and the 50-day SMA at $3,346.20. A sustained move above $3,380 could open the door to a retest of recent highs at $3,409.43 and $3,439.04. Support rests at $3,311.56 and $3,310.48.

With Fed independence in question and rate cut bets rising, the gold market outlook remains bullish in the near term.

More Information in our Economic Calendar.