Gold Price Forecast: XAU/USD keeps breaking into fresh record highs; where next?
- Gold tested $5,600 as the record rally extended into early Thursday before profit-taking seeped in.
- The US Dollar holds its overnight recovery following Bessent’s reassurance, Fed rate cut pause.
- Gold stays a ‘buy-on-dips trade, despite extremely overbought conditions on the daily timeframe.
Gold is keeping its corrective decline intact toward $5,500 early Thursday after having tested $5,600 for the first time on record amid relentless buying.
Gold keeps pushing higher
Despite a cautious hold interest rate decision announced by the US Federal Reserve (Fed) on Wednesday, Gold’s record-setting stint remains unabated.
However, buyers take a breather amid resurgent demand for the US Dollar (USD). Optimistic comments on employment and economic growth from Fed Chair Jerome Powell during the post-policy meeting press conference lifted the Greenback across the board.
Additionally, US Treasury Secretary Scott Bessent calmed investor nerves late Tuesday, while stalling the decline in the USD. In an interview to CNBC, Bessent highlighted that the US has always had a "strong dollar" policy and that they are "absolutely not" intervening in the Japanese currency markets.
Furthermore, upbeat earnings reports from the American tech titans such as Meta, Microsoft and Tesla spur market optimism and cap the Gold price upside.
From a broader perspective, diminishing investors’ confidence in US assets, amid President Donald Trump’s erratic foreign policies, the diversification away from fiat currencies and geopolitical risks will continue powering the record-setting spree in Gold.
Hence, any corrective pullback is more likely to get bought into.
Looking ahead, Gold traders might take cues from the mid-tier US Jobless Claims and trade data for some fresh trading impulse as Trump is unlikely to announce his Fed Chair pick this week.
Citing Bessent, Yahoo News reported earlier that Trump’s Fed Chair pick may come in a week or so.
Gold price technical analysis: Daily chart
In the daily chart, XAU/USD trades at $5,549.90. The 21-day Simple Moving Average (SMA) rises above the 50-, 100- and 200-day SMAs, underscoring strong bullish momentum. All SMAs slope higher, and price holds decisively above them. The 21-day SMA at $4,730.36 offers initial dynamic support. The Relative Strength Index (14) prints 91.08 (overbought), which could cap near-term gains and trigger consolidation.
Broader trend metrics remain supportive, with the 200-day SMA at $3,784.46 marking long-term support and the shorter SMAs continuing to rise. RSI stays stretched in overbought territory, so any cooling could drive a pullback toward the $4,462.59–$4,213.40 area, where the rising SMAs could cushion declines before bulls attempt another leg higher.
(The technical analysis of this story was written with the help of an AI tool.)
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
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Author
Dhwani Mehta
FXStreet
Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.
