Gold (XAU) Price Forecast: Bulls Eye $3,500 as Dollar Weakens on Fed Turmoil

Gold Surges to Record High as Dollar Cracks Under Trade and Fed Pressure

Gold prices extended their rally on Monday, hitting an all-time high of $3,397.90, driven by a sharp drop in the U.S. dollar and deepening concerns over trade policy and Federal Reserve independence. With the market well above the 50-day moving average at $3,015.58, traders are aggressively buying strength, suggesting confidence in continued upside rather than reacting to traditional overbought signals.

At 10:48 GMT, XAUUSD is trading $3392.62, up $65.24 or +1.96%.

Dollar Breakdown Fuels Safe-Haven Demand

The U.S. dollar index slid to a three-year low of 98.164, pressured by growing skepticism about Fed independence after President Trump’s renewed attacks on Chair Jerome Powell. Reports that the administration is exploring ways to remove Powell rattled investor confidence, pushing the dollar to multi-month and multi-year lows across the board. The greenback dropped more than 1% against the Swiss franc to 0.80695 and fell to a seven-month low against the yen at 140.615.

As the dollar weakens, gold becomes cheaper for holders of other currencies, amplifying international demand. With capital fleeing U.S. assets due to trade uncertainties and political interference in monetary policy, the case for gold as a hedge continues to build.

Trade Tensions Resurface, Adding to Bullish Momentum

Trade concerns re-emerged after China warned nations against aligning with U.S. economic policy, while Trump’s broad tariffs have already triggered volatility across global markets. With the economic outlook clouded, safe-haven flows into gold have accelerated. Analysts now expect additional stimulus measures from China, further driving demand for real assets like bullion.

Technical Setup Still Firm Despite Elevated Levels

Despite being far above its key support levels—pivot support at $3,177.23 and the 50-day MA at $3,015.58—the gold market is not showing typical signs of exhaustion. Instead of cooling, investors are using upside breakouts to add positions. While positioning may appear crowded, there is no technical reversal pattern yet to suggest a top.

Gold Prices Forecast: Bullish Bias Remains Intact

With the dollar under pressure, Fed credibility in question, and geopolitical risks escalating, the outlook for gold remains bullish. The next potential target for bulls sits around $3,500, according to UBS, and unless a confirmed reversal pattern emerges, traders are likely to continue buying dips. Dollar weakness remains the primary driver, and until that changes, gold’s rally shows no signs of topping out.

More Information in our Economic Calendar.