Gold Price Forecast | Prices Surge Toward $3,500 as Fed Rate Cuts and Weak Dollar Boost Momentum

What to Know

• Gold surged to $3,489.85, nearing its all-time high at $3,500.20, with bullish targets pointing toward $3,879.64 by late September.
• Markets now price a 90% probability of a Fed rate cut in September, boosting demand for non-yielding assets like gold.
• The U.S. dollar slipped to a five-week low, making gold more attractive to overseas buyers and supporting global demand.

Gold Prices Push Toward Record Highs

Gold (XAU/USD) began the new week on a strong note, soaring to $3,489.85 and edging close to its all-time peak of $3,500.20. Traders are closely watching this resistance level, as a decisive breakout could ignite a technical run toward $3,879.64 by September 23.

At the time of writing, gold trades at $3,470.91, up $23.48 or +0.68% on the day. Despite thinner liquidity due to the U.S. Labor Day holiday, bullish momentum has remained intact, showing that underlying demand continues to drive the market.

Fed Rate Cut Bets Fuel Gold’s Upside

One of the strongest drivers of gold’s recent rally is the expectation of U.S. Federal Reserve rate cuts. San Francisco Fed President Mary Daly recently expressed support for easing, citing risks in the labor market. Meanwhile, the Fed’s preferred inflation gauge — the personal consumption expenditures (PCE) index — rose in line with estimates, reinforcing the case for a policy shift.

Money markets now assign a 90% probability of a 25-basis-point cut at the September Fed meeting. Traders also anticipate more than 100 basis points of easing by autumn 2026. Historically, gold thrives in a low-rate environment because its appeal as a non-yielding asset strengthens relative to bonds and other interest-bearing investments.

Silver has joined the rally as well, climbing above $40 for the first time since 2011, highlighting broader strength in precious metals.

Dollar Weakness Boosts Bullion Demand

Another tailwind for gold comes from the U.S. dollar. The Dollar Index (DXY) slipped 0.25% to 97.606, its lowest level in five weeks. A weaker greenback makes gold cheaper for foreign buyers, increasing global demand.

The decline in the dollar reflects concerns about slowing U.S. economic growth and growing political pressure on the Fed’s independence. This dynamic adds to gold’s bullish case, as foreign investors take advantage of favorable exchange rates to diversify into bullion.

Investors will closely watch this Friday’s nonfarm payrolls report, where August job gains are expected at 78,000, up slightly from July’s 73,000. A softer-than-expected labor report could further solidify the case for Fed easing, reinforcing the bullish outlook for gold.

Is Gold Overbought?

While momentum clearly favors the bulls, some traders are questioning whether gold is becoming overextended. The metal has climbed more than $178 in just eight sessions and has closed higher in five consecutive days.

Currently, gold is trading about $138 above its 50-day moving average. Although this is not extreme compared to past surges — in April, the spread reached $543 — it still raises the question of whether short-term consolidation may be needed before the next leg higher.

Gold Price Forecast: Can Bulls Push Toward $3,879?

As long as the Fed easing narrative holds, gold prices are likely to remain supported. If bulls succeed in breaking decisively above $3,500.20, the next upside target lies near $3,879.64, a swing chart projection that aligns with momentum-based forecasts for September.

Key resistance zones to watch:

• $3,500.20 – the all-time high.
• $3,879.64 – extended breakout target by September 23.

Key support zones to watch:

• $3,400 – initial support if prices retrace.
• $3,325 – stronger technical support around the 50-day moving average.
• $3,250 – a deeper retracement level that could attract fresh buyers.

Overall, the gold market remains structurally bullish, underpinned by macroeconomic factors like dovish Fed expectations, a weakening dollar, and heightened geopolitical risks.

Q&A: Gold Price Outlook

Why is gold rallying toward $3,500?

Gold is rallying due to expectations of a September Federal Reserve rate cut, a weaker U.S. dollar, and rising global demand. Together, these factors make gold more attractive as both a hedge and a speculative asset.

What happens if gold breaks above $3,500?

A clean breakout above $3,500 could trigger technical buying and push gold toward the next major target at $3,879.64 by late September.

Is gold overbought right now?

Gold has rallied nearly $180 in just over a week, which could indicate short-term overbought conditions. However, compared to past surges, the current move is not excessively stretched, leaving room for further gains.

How does the U.S. dollar impact gold prices?

A weaker dollar makes gold cheaper for foreign buyers, boosting demand. Since the dollar recently hit a five-week low, this has added strong support for gold’s upward momentum.

What key levels should traders watch?

Resistance sits at $3,500 and $3,879, while support is seen at $3,400, $3,325, and $3,250. Holding above $3,400 will be crucial for sustaining bullish momentum.

For more daily forecasts and expert analysis on gold (XAU/USD) and other major markets, visit our Forecasts section and stay ahead of the trends.