Gold forecast: XAU/USD surges at $3,500, now testing all-time highs

Fundamental drivers behind Gold’s surge to $3,500

The rally to $3,500 is not just about technical breakouts — it reflects a deeper macro shift. Several fundamental and news catalysts are fueling gold’s drive toward all-time highs:

• Federal Reserve Policy Outlook: Markets maintain high expectations for a September rate cut, with CME FedWatch Tool showing probabilities heavily tilted toward easing. Lower yields diminish the opportunity cost of holding gold, a classic driver of sustained upside.

• US Dollar weakness: The greenback has softened as investors price in a more dovish Fed and slower growth momentum. The dollar’s decline adds fuel to gold’s advance, reflecting their strong inverse correlation.
• Geopolitical tensions: Persistent instability in the Middle East and continued trade risks between the U.S. and China have reinforced gold’s safe-haven bid. Investors are rotating into defensive assets, which has strengthened bullion’s role as a hedge.
• Institutional conviction: Large banks, including HSBC and J.P. Morgan, maintain forecasts for gold stretching into the $3,600–$4,000 zone, reinforcing the notion that the current push is not merely speculative but institutionally supported.

Together, these catalysts provide the fundamental backbone for gold’s aggressive rally from $3,400 to $3,500 — a move that now places all-time highs firmly within reach.

Previous forecast: $3,400 target hit

In last week’s gold forecast, we highlighted the importance of the $3,386–$3,400 zone, where price was consolidating after filling a higher-timeframe Fair Value Gap (FVG). The projection suggested gold would likely respect that demand region before continuing higher.

That expectation was validated:

• Price briefly dipped into $3,386, respected the support, and then surged above $3,400 with conviction.
• This move reflected strong institutional order flow, confirming the outlook that gold was primed for a breakout rather than a deeper retracement toward $3,351.

This sets the stage for today’s market structure — a rally that has already carried gold close to $3,500.

Gold all-time high levels

Gold is now trading at $3,500, a critical level that places the market just shy of all-time highs. The difference between the previous leg and the current surge is striking:

• Previous move (forecasted zone $3,386–$3,400): Consolidation-driven, corrective in nature, absorbing supply.
• Current move ($3,500): Aggressive breakout, leaving multiple unmitigated FVGs below and suggesting institutional urgency.

This acceleration implies that gold is firmly in a price discovery phase, with the potential to test and surpass its all-time high if momentum persists.

Technical outlook: Gold testing ATH level

Gold is now hovering just under the $3,500 all-time high level, a key psychological and structural barrier. The sharp rally left behind an H4 Fair Value Gap between $3,478–$3,490, which may act as a magnet for short-term liquidity. This means that while bulls remain in control, the market could revisit the FVG before attempting another breakout.

The question traders face is whether gold will consolidate and push higher into price discovery, or reject $3,500 and retrace deeper into untested demand zones.

Bullish scenario: Breakout and continuation

If gold sustains momentum above $3,500, it signals that institutions are absorbing supply and driving the market into fresh record territory. The FVG at $3,478–$3,490 could serve as a launchpad if retested, offering buyers a liquidity-based entry before continuation.

Bullish Targets:

• Immediate upside: $3,520–$3,540.
• Extended move: $3,600–$3,650, in line with institutional forecasts.
• Stretch target: $3,700+ if risk-off flows accelerate and Fed delivers deeper easing.

Bearish scenario: Rejection and pullback

If gold fails to hold above $3,500 and sees strong rejection, price may rotate lower to fill imbalances. The H4 FVG between $3,478–$3,490 is the first key demand area. Failure to hold this zone could trigger a deeper retracement toward $3,450–$3,440, or even extend back to $3,400, where prior structure and liquidity reside.

Bearish targets:

• Initial retrace: $3,478–$3,490 (FVG zone).
• Secondary support: $3,450–$3,440.
• Deeper pullback: $3,400 (major liquidity level, previous breakout zone).

Conclusion

The $3,500 level is the defining pivot: a sustained breakout turns the path bullish toward $3,600, while a rejection opens the door for liquidity-driven pullbacks into the $3,478–$3,490 demand zone. Traders should anchor bias on how gold interacts with this key level in the coming sessions.