Gold Price Forecast: XAU/USD Holds $3,775 as Fed Uncertainty and Dollar Strength Shape Outlook

Gold (XAU/USD) opened at $3,796.90 per ounce, brushing the $3,800 threshold before slipping toward $3,760. Futures remain close to record highs after a 44% rally year-on-year, but traders are digesting a wave of conflicting Federal Reserve signals and a firmer U.S. dollar. Over the past month, gold has advanced 13.4%, while the weekly move sits at +3.5%, reflecting persistent safe-haven demand.

Fed Division Fuels Volatility in Precious Metals

The Fed narrative is fractured. New Trump-appointed governor Stephen Miran pressed for an aggressive 200-basis point cut, while Michelle Bowman argued that jobs should outweigh inflation fears. Powell countered with a warning that cutting too quickly risks reigniting price pressures, confirming that the path to easing will be slower than markets expected. Futures now price a 25 bps September cut to 4.00–4.25%, with projections for -50 bps more by year-end and further trimming into 2026. This uncertainty has amplified gold’s role as a policy hedge.

Dollar Strength Caps Gold’s Breakout Momentum

The U.S. Dollar Index climbed through 97.30, ending a two-day decline, supported by Powell’s cautious tone. A stronger dollar limited bullion’s move above $3,791, yesterday’s all-time high. Short-term pullbacks are finding support at $3,750, with deeper cushions at $3,736 and $3,700. Resistance stands at $3,790–$3,800, while a Fibonacci extension projects $3,828 as the next hurdle if bulls regain control.

Technical Signals Show Overbought Market but Strong Trend

Momentum indicators are stretched. The 14-day RSI sits near 78, well above the 70 overbought line, while MACD lines remain in steep positive alignment. On the 4-hour chart, oscillators have cooled, suggesting room for a pullback, but the broader trend remains bullish. The 50-day EMA at $3,542 is rising steadily, reinforcing a dynamic support base. Analysts note that any dip toward $3,700–$3,650 could be viewed as a renewed accumulation zone, given ETF inflows and central bank demand.

Central Banks and ETF Flows Anchor the Bullish Case

Global reserve managers continue to accumulate gold. Official sector purchases have now risen for five consecutive quarters, the longest streak since the 1970s. ETF flows reached a three-year high last week, showing institutional portfolios are still treating bullion as a core hedge. At $3,600–$3,800, the market may look expensive in nominal terms, but relative to global money supply, strategists argue gold remains undervalued. Goldman Sachs recently set a $3,700 year-end target, which the market has already eclipsed, underlining structural demand.