Gold (XAUUSD) Price Forecast: Gold Breakout Looms If Fed Delivers Dovish Surprise

Gold Pressured by Fed Uncertainty, Key Pivot at $3643.76 Holds the Line

Gold is treading water just below a key pivot at $3643.76 on Monday, pausing as traders await direction from the Federal Reserve’s rate decision later this week. The metal has traded in a tight range since Thursday, repeatedly testing resistance at this level but failing to establish a sustained breakout. Technical traders are treating $3643.76 as the control point for intraday momentum, with directional bias likely to follow any decisive break.

At 10:04 GMT, XAU/USD is trading $3643.26, up $0.17 or +0.00%.

Can Gold Break Resistance or Is a Pullback Imminent?

The technical outlook hinges on whether bulls can maintain buying pressure above $3643.76. A close above this mark could fuel momentum toward the all-time high of $3674.70. If that level is breached, the path could open toward $3879.64.

However, upside remains tentative with no clear evidence of large buyers defending current prices. Conversely, failure to hold above $3643.76 could trigger a pullback toward $3612.83, with the next downside watch zone around the short-term 50% retracement level at $3593.20 — a potential trigger for deeper weakness.

Fed Rate Cut Expected, but Forward Guidance Is the Wild Card

Gold’s muted price action reflects broader caution ahead of the Federal Reserve’s two-day policy meeting concluding on Tuesday. Markets are pricing in a 25 basis point rate cut, with the CME FedWatch tool suggesting a high probability of further cuts in October and December. Still, traders remain divided over Fed Chair Jerome Powell’s post-meeting tone — particularly whether he will strike a dovish or cautious balance regarding the path of future easing.

Ricardo Evangelista of ActivTrades noted that while a cut is widely anticipated, “doubts remain over the tone Powell will adopt.” This uncertainty is restraining speculative positioning in gold, with investors wary of being caught wrong-footed on the Fed’s signal.

Inflation and Labor Data Complicate the Fed’s Position

The latest data complicates the Fed’s messaging. August CPI rose to 2.9% YoY, the largest monthly jump since January, while core inflation edged up to 3.1% — both above the Fed’s 2% target. At the same time, weekly jobless claims rose to their highest level since October 2021, raising concerns about labor market softness. Treasury yields have reacted cautiously, with the 10-year holding steady around 4.06% and little movement across the curve.

Market Forecast: Range Holds Until Fed Sparks Breakout

Until the Fed delivers clarity, gold is likely to continue pivoting around $3643.76. A hawkish tone could cap further gains and open downside risk toward $3593.20. However, if the Fed confirms a dovish tilt and soft economic signals persist, gold may retest $3674.70 and extend higher. For now, traders should expect rangebound action until Tuesday’s policy verdict reshapes the rate outlook.

More Information in our Economic Calendar.