Gold (XAU) Price Forecast: Bullish Momentum or Breakdown? Market Awaits Fed and Jobs Data

Gold Edges Lower as Investors Await U.S. Labor Market Data

Gold prices slipped for a second consecutive session on Monday, marking a key resistance level of $2685.64 on the daily swing chart. This follows the sharp uptrend witnessed earlier in the month.

The key support is now seen at $2616.25, which aligns with the 50% retracement level of the trading range between the main top at $2685.64 and the bottom at $2546.86.

A move above $2685.64 would signal a resumption of the uptrend, while sustained trading below $2616.50 could open the door to testing the $2546.86 level.

At 09:51 GMT, XAU/USD is trading $2649.92, down $8.62 or -0.32%.

Gold Poised for Best Quarter Since 2016

Despite the recent pullback, gold remains near record highs and is on track to post its best quarterly performance in over eight years. Prices have surged more than 14% this quarter, largely fueled by a dovish U.S. Federal Reserve, which cut rates by 50 basis points, and ongoing geopolitical tensions in the Middle East. Additionally, China’s stimulus measures have supported demand for safe-haven assets. For the month of September, gold has gained 6%, bolstered by last week’s peak of $2685.42.

Market analysts suggest further gains could be in store if upcoming U.S. labor market data supports expectations for an additional 75 basis points in rate cuts by the Federal Reserve before year-end. Tim Waterer, Chief Market Analyst at KCM Trade, noted, “Gold still looks poised to have a potential run at $2,700 if labor market data this week aligns with the potential of more Fed easing.”

Rising Treasury Yields and Inflation Concerns

Meanwhile, U.S. Treasury yields have been climbing, as investors assess the latest inflation data and its implications for future monetary policy. The Federal Reserve’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) index, showed a modest 0.1% month-over-month increase for August, with the annual inflation rate slowing to 2.2%. Core PCE, which excludes volatile food and energy prices, rose 2.7% year-on-year, signaling that inflation pressures may be abating.

The market is awaiting additional economic data, including September’s non-farm payrolls and unemployment figures. These data points, along with speeches from Fed officials like Chair Jerome Powell, could provide more clarity on the central bank’s rate outlook.

Geopolitical Tensions Add Support to Gold Prices

Geopolitical turmoil continues to offer a strong tailwind to gold prices. Over the weekend, Israel launched airstrikes against Houthi militias in Yemen and Hezbollah targets in Lebanon, further escalating tensions in the region. Historically, gold tends to benefit from safe-haven demand during such periods of geopolitical instability, as it remains a preferred asset for investors during crises.

Gold Prices Forecast: Cautiously Bullish Outlook

While gold has softened slightly in recent sessions, the market still leans bullish in the short term, especially if upcoming U.S. labor data reinforces expectations of additional rate cuts. A move back towards the $2,700 level is possible, provided economic data supports a dovish Federal Reserve.

On the downside, sustained pressure below $2616.50 would signal increased risk of a correction towards $2546.86. Traders should remain alert to key economic reports and geopolitical developments, as these could drive volatility in gold prices.