Fed Rate Cut Expectations Support Bullish Gold Outlook
Gold (XAU/USD) is closing the week near record levels after hitting an all-time high of $3674.70 on Tuesday. Despite a dip to $3612.83 on Thursday, the metal has mostly been trading in a tight range between those levels. As of late Friday, XAU/USD is edging higher again, trading around the midpoint of the current range at $3643.76.
Traders are eyeing $3674.70 as the key breakout level to confirm a continued uptrend. A broader support zone lies between $3511.75 and $3674.70, with its midpoint at $3593.22 offering additional footing. Major support is stacked at a price cluster between $3500.20 and $3493.13.
U.S. Labor Data Strengthens Gold Prices Forecast
The bullish sentiment in gold is underpinned by growing expectations that the Federal Reserve will cut rates at its upcoming meeting. A series of weak U.S. labor market indicators—including a jump in jobless claims, downward revisions shaving 911,000 jobs from the past year, and softer-than-expected payroll growth—have reinforced market conviction for a policy shift.
Despite a stronger-than-expected monthly rise in consumer prices in August, traders appear more focused on labor market deterioration. Fed funds futures now fully price in a 25-basis-point cut at the September 17 meeting, with fading expectations of a larger 50-basis-point move.
ETFs and Central Bank Activity Fuel Long-Term Bullish Bias
Gold has gained 1.7% this week and is on track for its fourth consecutive weekly gain, lifting its year-to-date performance to 39%. Exchange-traded fund flows into gold have picked up again, signaling continued institutional interest. UBS now projects gold to hit $3,900/oz by mid next year, citing rate cut tailwinds and persistent inflation risks.
On the global front, the People’s Bank of China is exploring changes to gold trade policy, seeking public feedback on proposals to streamline licensing for gold imports and exports. The move could eventually increase gold liquidity and import volumes in one of the world’s top buyers.
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See all Gold forecastsGold Prices Forecast: Breakout Watch Above $3674.70
With a confirmed support base above $3593.22 and aggressive “buy the dip” behavior still dominant, gold remains poised for a bullish continuation. A close above $3674.70 would confirm fresh upside momentum, opening the door to new record highs. Until then, consolidation within the current range is likely, with traders watching Fed action next week as a key catalyst.
More Information in our Economic Calendar.
