Gold (XAUUSD) Price Forecast: Higher Yields, Dollar Cap Gains Below $3658.03 Pivot

Gold Prices Eye $3658 Pivot as Traders React to Fed Cut and Rising Yields

Gold is edging higher on Friday but remains stuck below a key technical pivot at $3658.03, keeping bulls cautious. The market is trading inside Thursday’s range, reflecting indecision as traders weigh the Fed’s rate cut, rising Treasury yields, and a firmer U.S. dollar. Volatility remains contained, but pressure is building near critical levels.

At 12:34 GMT, XAU/USD is trading $3649.22, up $5.04 or +0.14%.

Can Gold Hold Ground as Treasury Yields Grind Higher?

The bond market is showing signs of stress, with U.S. Treasury yields pushing higher following the Federal Reserve’s widely expected 25 basis point cut. The 10-year yield is up at 4.131%, while the 30-year sits at 4.743%. These rising yields are capping gold’s upside, even as the Fed signaled two more cuts are likely this year.

Short-term rates are holding steady, but the long end of the curve is telling a story of persistent inflation concerns and doubt over whether the Fed can engineer a soft landing. This yield environment raises the opportunity cost of holding gold, limiting bullish momentum unless rates retreat.

Dollar Recovers as Fed Message Falls Short of Dovish Expectations

The U.S. Dollar Index bounced to 97.801, recovering from a post-Fed low not seen since early 2022. The greenback was lifted by stronger-than-expected jobless claims data and a cautious tone from Fed Chair Jerome Powell, who described the cut as a risk-management move rather than the start of an aggressive easing cycle.

Despite the cut, the lack of a strong dovish commitment disappointed traders betting on deeper policy easing. Still, the futures market is pricing in nearly a 90% chance of another cut at the Fed’s next meeting, suggesting dollar gains may be capped.

Citi Hikes Gold Forecast to $3800 on Fiscal, Structural Risks

Citi upgraded its three-month gold price forecast to $3800 from $3600, citing a mix of cyclical and structural drivers. The bank flagged U.S. labor market weakness, rising fiscal deficits, and questions about the Fed’s independence as key factors supporting higher gold prices.

In a more extreme scenario—marked by stagflation or a hard landing—Citi believes gold could spike to $4000, though they also note a downside risk to $3400 if global growth fears ease and policy normalization resumes.

Gold Prices Forecast: Bullish Bias Holds Above $3627, But Watch $3658.03

Gold remains technically constructive while holding above $3627.96. The market is currently trading just below the key pivot at $3658.03. A sustained move above this level would confirm buyer interest and open the door for a retest of the record high at $3707.56.

If bulls clear that barrier with conviction, attention will shift toward Citi’s $3879.64 target. For now, the gold prices forecast remains bullish while prices consolidate above near-term support, but a breakout above $3658.03 is needed to trigger the next leg higher.

More Information in our Economic Calendar.