Gold forecast: Gold confirms bullish breakout above $3,420

Market narrative

Gold has finally confirmed the bullish breakout structure that had been building for weeks.

After holding the $3,240–$3,380 range, a key resistance zone from early July, XAU/USD surged past the $3,400 resistance, validating the institutional accumulation phase. The move comes amid rising geopolitical and economic uncertainty, central bank accumulation (especially from China), and a weaker U.S. dollar as markets anticipate a more dovish tone from the Fed in Q3.

This momentum shift has pushed gold within striking distance of the multi-year high at $3,500, which, if broken, could open the door toward $3,600 and potentially $3,700+, aligning with institutional forecasts.

Key fundamental drivers

1. China’s hidden Gold reserves Fuel long-term demand

MarketWatch and Reuters reports suggest China’s official reserves (2,300t) may underrepresent its real holdings, which could exceed 5,000 tons. This aggressive accumulation underlines Beijing’s broader de-dollarization strategy, further reinforcing gold’s structural support.

2. Dollar weakness and US yield drop

Recent U.S. data has fallen short of expectations—particularly in housing, consumer sentiment, and business surveys—weakening the dollar and giving gold breathing room above $3,400.

3. Political volatility elevates Gold’s appeal

Markets briefly spiked after reports emerged that President Trump may attempt to remove Fed Chair Powell. While speculative, it sent a shockwave through rate-sensitive markets, reinforcing gold’s safe-haven bid.

4. Institutional forecasts turning more aggressive

• J.P. Morgan targets $3,800–$4,000 gold by year-end if global uncertainty persists.
• HSBC projects $3,600 as a near-term rally point under current policy outlooks.
• Morgan Stanley has issued similar calls, citing the Fed's expected pivot and Asia’s sustained demand.

Technical outlook

Previous Forecast: Weekly Forecast: Nasdaq & S&P 500 Hit All-Time Highs, XRP Leads Crypto Breakout, Gold Eyes $3,400.

Gold has decisively broken out of its multi-week consolidation, above the $3,375 resistance level, confirming a bullish breakout structure and reclaiming key premium territory. The move validates our previously outlined breakout forecast.

Bullish scenario: Continuation through FVG aupport

Gold has formed two Bullish Fair Value Gaps between $3,390–$3,405 and $3,420–$3,425. If price pulls back and finds support within these gaps, it could confirm that institutions are defending discount pricing.

Note: $3,370 support is still valid for an upside continuation.

• Price must show bullish re-accumulation inside the FVGs (e.g. bullish engulfing, rejection wicks, liquidity sweep).
• A clean reclaim above $3,450 will confirm continuation.
• Retesting them at a premium confirms buyers are still in control.
• Absence of major bearish catalyst in fundamentals supports further upside.

Targets:

• First Target: $3,450 – recent swing high.
• Second Target: $3,500 – psychological round number.
• Third Target: $3,600 – extension target & institutional projection (as forecasted by JPMorgan & HSBC).

Bearish scenario: Distribution followed by breakdown

If price fails to hold within the Bullish FVGs and begins to form lower highs beneath $3,420, it could signal distribution at premium pricing. This would align with a return-to-range scenario.

• Breakdown through $3,395 and $3,380 Fair Value Gaps.
• Clean bearish close below $3,370 (prior range high).
• If the market is risk-on or if upcoming U.S. data strengthens the dollar, gold could correct.
• Strong daily rejection from the $3,451 level increases probability of reversal structure forming.