Gold Price Forecast: XAU/USD record run continues, $3,800 in sight

XAU/USD Current price: $3,779.62

• China’s appearance in the bullion market boosted the bright metal.
• US S&P Global PMIs came in line with estimates in September, according to flash estimates.
• XAU/USD consolidates near fresh all-time highs, buying interest unabated.

Gold run to record highs continued on Tuesday, with the bright metal approaching the $3,800 threshold. A mixture of broad US Dollar (USD) weakness, geopolitical tensions, China, and a dovish Federal Reserve (Fed) maintained the bright metal on the run.

The latest catalyst for XAU/USD's rally was news indicating that the People’s Bank of China (PBoC) is using the Shanghai Gold Exchange to buy bullion in friendly countries and store it within Chinese borders, according to people familiar with the matter.

However, the record run could also be attributed to the recently adopted Fed’s dovish stance. True, policymakers introduced some noise after the announcement, while sharing their particular perspectives. Still, Chair Powell has the last say, and he will soon be on the wires, discussing the economic outlook at the Greater Providence Chamber of Commerce Economic Outlook Luncheon in Rhode Island.

Meanwhile, mounting tensions between Russia and Ukraine add to the demand for the bright metal. Back and forth drone attacks between Moscow and Kyiv have been reported on Tuesday, as Ukrainian President Volodymyr Zelenskyy seeks the United Nations (UN) and US President Donald Trump’s help.

Other than that, S&P Global reported that business activity lost momentum in September, according to preliminary estimates. The Composite Purchasing Managers’ Index (PMI) ticked down to 53.6 from 54.6 in August. Nevertheless, expansion continued in the manufacturing and services sectors. Manufacturing output eased to 52 from the previous 53, while the services index eased to 53.9, as expected from 54.5, suggesting demand there may be easing. The modest downtick hints at easing momentum, but also indicates business remains on the growth path.

US growth will remain under the spotlight, as the country will release on Wednesday the final estimate of the Q2 Gross Domestic Product (GDP).

XAU/USD short-term technical outlook

The XAU/USD pair holds on to solid gains for a third consecutive day, trading near its recent all-time peak at $3,791.12. Technical readings in the daily chart support yet another leg north, despite overbought conditions. The Momentum indicator ticks north within positive levels, while the Relative Strength Index (RSI) indicator stabilized at around 79. As it happens lately, the bright metal keeps advancing beyond bullish moving averages, with the 20 Simple Moving Average (SMA) currently at around $3,600, while also developing far above the bullish 100 and 200 SMAs.

In the near term, and according to the 4-hour chart, XAU/USD entered a pause. The pair consolidates near its recent high as technical indicators retreat from extreme levels, while still in overbought territory. At the same time, the pair is well above all bullish moving averages. Overall, the ongoing retracement gives no sign of the bullish trend abating.

Support levels: 3,767.10 3,753.90 3.736.2

Resistance levels: 3,791.00 3,805.00 3,820.00