Gold (XAUUSD) Price Forecast: Will Fed Easing Trigger a Breakout Toward $3879?

Gold Holds Firm as Fed Rate Cut Bets Drive Bullish Sentiment

Gold (XAU/USD) closed the week at $3,643.09, gaining over 1.5% as traders priced in a high probability of a Federal Reserve rate cut at the upcoming September 17 policy meeting. Despite midweek price swings, gold held near record highs, supported by soft U.S. labor market data, persistent inflation, and central bank demand.

Technical Analysis Targets $3879.64 by Month-End

The trend is up according to the weekly swing chart. The recent breakout over the former record high at $3500.20 reaffirmed the uptrend. This price is also new support. Additional support is the swing bottom at $3311.56. The major technical support is the 52-week moving average at $3025.64.

Our swing chart projection during September is $3879.64.

Labor Market Weakness Fuels Fed Pivot Expectations

U.S. labor data dominated the narrative, reinforcing expectations for monetary easing. Jobless claims jumped by 27,000 to 263,000, while nonfarm payrolls remained soft in August. The most impactful figure came from revisions to prior job estimates, with the Bureau of Labor Statistics acknowledging an overcount of 911,000 jobs between April 2024 and March 2025. These revisions cast doubt on prior employment strength and intensified calls for the Fed to act.

The market now assigns a 94% probability of a 25-basis-point cut at next week’s FOMC meeting, according to CME FedWatch. Although August’s Consumer Price Index (CPI) came in hotter than expected—rising 0.4% month-over-month—the labor market deterioration outweighed inflation concerns in shaping rate expectations.

Sticky Inflation and Dovish Policy Setup Create Bullish Backdrop

While inflation remains elevated, traders are discounting near-term price pressures in favor of long-term Fed easing. The Fed faces a complex environment: weakening job growth signals a softening economy, yet inflation remains stubborn. Nevertheless, gold continues to benefit from the safe-haven appeal of lower real yields and rising recession fears.

Central Bank Activity and ETF Inflows Extend Long-Term Support

Global demand fundamentals also played a role. The People’s Bank of China, which has been a consistent gold buyer, is seeking to simplify import/export procedures, potentially increasing market access. Meanwhile, institutional flows into gold-backed ETFs have resumed, signaling sustained bullish interest despite recent price consolidation.

Gold Prices Forecast: Bullish with Fed Decision in Focus

The broader gold prices forecast remains bullish heading into next week’s FOMC meeting. With Fed funds futures fully pricing in a rate cut, and economic indicators showing cracks in the labor market, gold is well-positioned for further gains. A dovish tone from the Fed could trigger fresh upside momentum, particularly if inflation data is downplayed in favor of employment concerns.

Unless upcoming data challenges this narrative, gold remains a preferred asset for traders betting on lower rates and sustained economic uncertainty.

More Information in our Economic Calendar.