Gold Price Forecast: XAU/USD bulls have the upper hand amid safe-haven buying, weaker USD
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UPGRADE- Gold price regains positive traction on Friday and remains close to a two-week top set on Thursday.
- US fiscal concerns, renewed US-China trade tensions, and geopolitical risks underpin the commodity.
- Fed rate cut bets and the emergence of fresh USD selling further lend support to the XAU/USD pair.
Gold price (XAU/USD) attracts some dip-buyers following the previous day's pullback from a two-week high and trades above the $3,300 round figure during the Asian session on Friday. Moreover, the fundamental backdrop suggests that the path of least resistance for the precious metal remains to the upside and supports prospects for an extension of over a one-week-old uptrend.
Renewed US-China trade tensions, US fiscal concerns, and persistent geopolitical risks have put the spotlight back on the safe-haven Gold price, which has risen 3% so far this week and is on track to register its best weekly performance since early April. China accused the US of abusing export control measures and violating Geneva trade agreements after the latter issued guidance warning companies not to use Huawei's Ascend AI chips. In response, China’s Commerce Ministry on Wednesday warned of legal action against individuals or organizations implementing US export restrictions. This highlights persistent tensions between the world's two largest economies and keeps a lid on the trade optimism.
Meanwhile, the Republican-controlled House of Representatives on Thursday narrowly passed US President Donald Trump's “Big, Beautiful Bill”. The sweeping tax cut and spending bill now heads to the Senate for approval and will add about $3.8 trillion to the federal government's debt pile over the next decade, fueling concerns about the worsening US fiscal situation. This comes after Moody’s downgraded the US credit rating from the top "Aaa" last week and a weak 20-year bond auction on Wednesday, which suggested that investors are shying away from US assets. This, along with a sluggish US economic outlook, keeps the US Dollar (USD) depressed and benefits the commodity.
Federal Reserve (Fed) officials expressed concerns over economic and business sentiment in the wake of the uncertainty tied to the Trump administration's trade policies. Moreover, the softer US Consumer Price Index (CPI) and the Producer Price Index (PPI) released last week reaffirmed market expectations that the US central bank will lower borrowing costs further. In fact, the CME Group's FedWatch Tool indicated a greater chance of at least two 25 basis points (bps) rate reductions by the end of this year. This further contributes to capping the Greenback's move higher led by Thursday's mostly upbeat US economic data and turns out to be another factor underpinning the non-yielding yellow metal.
On the geopolitical front, Trump reportedly told European leaders that Russian President Vladimir Putin isn’t ready to end the war with Ukraine as he thinks he is winning. Meanwhile, Israel's army has intensified its military campaign in Gaza, killing at least 85 people since the early hours of Thursday. Adding to this, the killing of two Israeli diplomats raises the risk of a further escalation of conflicts in the Middle East, which validates the near-term positive outlook for the safe-haven commodity.
XAU/USD 4-hour chart
Technical Outlook
From a technical perspective, the overnight pullback from a two-week top shows some resilience below the 23.6% Fibonacci retracement level of the move up from the monthly low touched last week. Adding to this, oscillators on hourly/daily charts are holding in positive territory, suggesting that the path of least resistance for the Gold price remains to the upside. Some follow-through buying beyond the overnight swing high, around the $3,346 area, will reaffirm the constructive outlook and allow the XAU/USD pair to reclaim the $3,400 round figure.
On the flip side, any meaningful slide below the $3,300 mark is likely to find some support near the $3,260-$3,258 confluence – comprising the 38.2% Fibo. retracement level and the 200-period Simple Moving Average (SMA) on the 4-hour chart. The latter should act as a key pivotal point, which if broken decisively could make the Gold price vulnerable to accelerate the fall toward the 50% retracement level around the $3,232 region, en route to the $3,200 round figure.
- Gold price regains positive traction on Friday and remains close to a two-week top set on Thursday.
- US fiscal concerns, renewed US-China trade tensions, and geopolitical risks underpin the commodity.
- Fed rate cut bets and the emergence of fresh USD selling further lend support to the XAU/USD pair.
Gold price (XAU/USD) attracts some dip-buyers following the previous day's pullback from a two-week high and trades above the $3,300 round figure during the Asian session on Friday. Moreover, the fundamental backdrop suggests that the path of least resistance for the precious metal remains to the upside and supports prospects for an extension of over a one-week-old uptrend.
Renewed US-China trade tensions, US fiscal concerns, and persistent geopolitical risks have put the spotlight back on the safe-haven Gold price, which has risen 3% so far this week and is on track to register its best weekly performance since early April. China accused the US of abusing export control measures and violating Geneva trade agreements after the latter issued guidance warning companies not to use Huawei's Ascend AI chips. In response, China’s Commerce Ministry on Wednesday warned of legal action against individuals or organizations implementing US export restrictions. This highlights persistent tensions between the world's two largest economies and keeps a lid on the trade optimism.
Meanwhile, the Republican-controlled House of Representatives on Thursday narrowly passed US President Donald Trump's “Big, Beautiful Bill”. The sweeping tax cut and spending bill now heads to the Senate for approval and will add about $3.8 trillion to the federal government's debt pile over the next decade, fueling concerns about the worsening US fiscal situation. This comes after Moody’s downgraded the US credit rating from the top "Aaa" last week and a weak 20-year bond auction on Wednesday, which suggested that investors are shying away from US assets. This, along with a sluggish US economic outlook, keeps the US Dollar (USD) depressed and benefits the commodity.
Federal Reserve (Fed) officials expressed concerns over economic and business sentiment in the wake of the uncertainty tied to the Trump administration's trade policies. Moreover, the softer US Consumer Price Index (CPI) and the Producer Price Index (PPI) released last week reaffirmed market expectations that the US central bank will lower borrowing costs further. In fact, the CME Group's FedWatch Tool indicated a greater chance of at least two 25 basis points (bps) rate reductions by the end of this year. This further contributes to capping the Greenback's move higher led by Thursday's mostly upbeat US economic data and turns out to be another factor underpinning the non-yielding yellow metal.
On the geopolitical front, Trump reportedly told European leaders that Russian President Vladimir Putin isn’t ready to end the war with Ukraine as he thinks he is winning. Meanwhile, Israel's army has intensified its military campaign in Gaza, killing at least 85 people since the early hours of Thursday. Adding to this, the killing of two Israeli diplomats raises the risk of a further escalation of conflicts in the Middle East, which validates the near-term positive outlook for the safe-haven commodity.
XAU/USD 4-hour chart
Technical Outlook
From a technical perspective, the overnight pullback from a two-week top shows some resilience below the 23.6% Fibonacci retracement level of the move up from the monthly low touched last week. Adding to this, oscillators on hourly/daily charts are holding in positive territory, suggesting that the path of least resistance for the Gold price remains to the upside. Some follow-through buying beyond the overnight swing high, around the $3,346 area, will reaffirm the constructive outlook and allow the XAU/USD pair to reclaim the $3,400 round figure.
On the flip side, any meaningful slide below the $3,300 mark is likely to find some support near the $3,260-$3,258 confluence – comprising the 38.2% Fibo. retracement level and the 200-period Simple Moving Average (SMA) on the 4-hour chart. The latter should act as a key pivotal point, which if broken decisively could make the Gold price vulnerable to accelerate the fall toward the 50% retracement level around the $3,232 region, en route to the $3,200 round figure.
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