Gold Price Forecast: XAU/USD on its way to retest record highs

XAU/USD Current price: $4,258

• The Federal Reserve trimmed the benchmark interest rate as expected.
• The US Dollar accelerated its slump following worse-than-anticipated employment data.
• XAU/USD regains its bullish poise and may soon revisit record highs.

Spot Gold extended its advance on Thursday, trading just below the December peak at $4,264.62. The XAU/USD advances for a third consecutive day on the back of a weaker US Dollar (USD), the latter weighed by the Federal Reserve (Fed) December monetary policy decision.

The central bank announced a 25 basis points (bps) interest rate cut on Wednesday, but maintained an overall hawkish stance, as the Summary of Economic Projections (SEP) showed policymakers are unwilling to move on with steeper interest rate cuts, despite United States (US) President Donald Trump's pressure on the matter.

Indeed, Federal Open Market Committee (FOMC) member Stephen Miran voted for a larger cut, but two other officials opted to keep interest rates on hold. Even further, the SEP maintained the view of just one interest rate cut for 2026, and anticipated another one in 2027. Market players initially considered buying the USD, yet by the end of the day, the Greenback was on the back foot, as investors still hope for a change in monetary policy coming next year.

Early Thursday, the US published Initial Jobless Claims for the week ended December 6, which unexpectedly jumped to 236K. The discouraging figure further fueled hopes for additional rate cuts, pushing USD lower across the FX board.

Friday will bring little of interest in terms of data, with sentiment likely to keep ruling financial boards.

XAU/USD short-term technical outlook

In the 4-hour chart, XAU/USD trades at $4,258.05, up for the day, and hinting at additional gains ahead. The 20-period Simple Moving Average (SMA) rises above the 100- and 200-period SMAs, and all three slope modestly higher, underscoring a bullish trend. Price holds above these gauges, with the 20 SMA at $4,209.49 offering nearby dynamic support and the 100 SMA at $4,170.32 underpinning the structure. At the same time, the Momentum indicator remains within positive levels, easing from a recent spike yet maintaining bullish pressure. Finally, the Relative Strength Index (RSI) indicator stands at 65, leaving room for a continuation before momentum stretches.

In the daily chart, XAU/USD trades above all bullish moving averages, in line with another leg north. The 20-day SMA at $4,159.19 offers nearby dynamic support. Meanwhile, the Momentum indicator expands above its midline, while the RSI advances at around 65. The trend structure remains favorable while the shorter averages stay stacked above the longer ones.

(The technical analysis of this story was written with the help of an AI tool)