Gold Price Forecast | Will the Fed Trigger a Breakout Above $3643?

What to Know

• Gold (XAU/USD) trades just under the $3643.76 pivot as markets await the Fed’s policy decision.
• A dovish Fed could push gold above $3674.70 and toward $3879.64.
• Failure to hold above $3643.76 risks a pullback toward $3593.20.
• Inflation pressures and labor market weakness complicate the Fed’s messaging.

Gold Stalls Ahead of Fed Decision

Gold prices paused near a key pivot level on Monday, reflecting investor caution ahead of the Federal Reserve’s highly anticipated rate decision. At 10:04 GMT, spot gold (XAU/USD) was trading at $3643.26, up just $0.17 or +0.00%, as traders weighed whether the Fed will deliver the dovish signal markets are betting on.

The market continues to test $3643.76 resistance, a level that has acted as the control point for intraday momentum since last week. Until the Fed provides clarity, gold remains stuck in a tight trading range, with bulls and bears both waiting for confirmation.

Can Gold Break Resistance?

The immediate outlook hinges on whether bulls can establish a sustained close above $3643.76. If this happens, gold could gain momentum toward the all-time high of $3674.70. A breakout beyond that level would likely spark a rally toward the next major upside target at $3879.64.

However, traders remain cautious. There has been no clear evidence of large-scale institutional buying at current levels, leaving the upside fragile. Failure to hold above the pivot could see gold retreat to $3612.83, with deeper support near the 50% retracement level at $3593.20. A decisive break below there could invite further weakness.

Fed Rate Cut Expected, but Guidance Is Key

The gold market’s muted reaction reflects uncertainty around the Fed’s policy stance. Markets overwhelmingly expect a 25-basis-point rate cut at Tuesday’s meeting, with additional easing possible in October and December.

But the key lies in Fed Chair Jerome Powell’s guidance. Will he lean dovish and reassure markets about further easing, or strike a more cautious tone given sticky inflation?

Ricardo Evangelista of ActivTrades summed up the dilemma, noting that while a rate cut is priced in, “doubts remain over the tone Powell will adopt.” This has kept speculative flows in check, with traders reluctant to take heavy positions before clarity emerges.

Inflation and Labor Data Complicate the Fed’s Task

Recent U.S. economic data paints a mixed picture:

• Inflation accelerated, with August CPI rising 2.9% year-on-year and core CPI climbing 3.1%, both above the Fed’s 2% target.
• At the same time, jobless claims surged to their highest since October 2021, raising concerns that the labor market is softening.

Treasury yields reflect this tug-of-war, with the 10-year holding near 4.06% as markets await direction. These cross-currents complicate Powell’s messaging, making this week’s press conference a pivotal moment for gold traders.

Market Forecast: Range Holds Until Fed Speaks

For now, gold appears set to pivot around $3643.76 until the Fed meeting provides direction.

• Hawkish outcome: A cautious Powell could cap gains and expose gold to a retreat toward $3593.20.
• Dovish outcome: A clear signal of more cuts ahead may boost confidence, enabling a retest of $3674.70 and possibly higher toward $3879.64.

Until then, traders should expect rangebound price action and heightened volatility around Tuesday’s Fed announcement.

Q&A: Gold Price Outlook

Why is gold consolidating below $3643.76?

Gold is holding near this pivot as traders wait for the Fed’s policy guidance. A breakout above could trigger bullish momentum, while failure risks a pullback.

What role does the Fed play in gold prices?

Lower interest rates weaken the U.S. dollar and reduce bond yields, both of which tend to benefit gold as a non-yielding asset. The Fed’s tone is often more important than the actual cut.

What key levels should traders watch?

Resistance is at $3643.76 and $3674.70, with upside potential toward $3879.64. On the downside, support sits at $3612.83 and $3593.20.

How do inflation and jobs data affect gold?

Stronger inflation pressures may limit Fed easing, capping gold’s gains, while weaker labor data supports the case for more cuts, which is bullish for gold.

For more daily forecasts and expert analysis on gold price trends, including short-term movements, long-term outlooks, and market drivers, visit our Forecasts section and stay ahead of market trends.