Gold (XAU) Price Forecast: Fed Signals, Stronger Dollar Slow Rally, But Bullish Case Holds

Gold Prices Forecast: Rally Cools as Fundamentals Stay Firm

Gold softened slightly last week after a sharp multi-session run, as traders took profits and the U.S. dollar firmed. But despite the breather, the fundamental case for gold remains intact. Safe-haven demand, dovish central bank policy expectations, and persistent geopolitical and inflationary risks continue to provide solid backing for the metal.

Last week, XAU/USD settled at $3023.98, up $39.07 or +1.31%.

Fed Holds, But Policy Remains Supportive

The Federal Reserve left rates unchanged but stuck with its projection for two cuts later this year. While Powell kept the door open to easing, the Fed did bump up its inflation outlook, acknowledging persistent price pressures tied to tariffs and supply chain strain.

The message was clear: rate cuts are still likely, but the path could be slower and more data-dependent. That mix of caution and accommodation keeps gold in play for investors looking to hedge against both inflation and macro volatility.

Dollar Pressure and Position Unwinding

Gold’s recent pullback was partly driven by a modest bounce in the dollar, which gained on expectations that the Fed might not rush into easing. A stronger greenback, combined with gold’s technically overbought state, created the perfect setup for some position unwinding late in the week.

Still, the move appears more like a technical cooldown than a shift in broader sentiment. Dip buyers haven’t gone far—and they’re likely watching closely for the next entry.

Geopolitics and Trade Tensions Keep Safe-Haven Flows Alive

The metal’s underlying bid is also supported by heightened geopolitical tension. Renewed military action in the Middle East, coupled with U.S.-China friction and looming tariff escalations, is keeping risk appetite in check.

Inflation fears tied to global trade disruptions are adding another layer of support for gold as a defensive asset. Even as physical demand from Asia softens, institutional flows—particularly into ETFs—are helping sustain interest.

Outlook: Consolidation Phase, But Bullish Foundation Holds

While the recent surge may have cooled, the broader bullish narrative hasn’t changed. The combination of rate cut expectations, geopolitical risk, and defensive asset rotation continues to favor gold.

Short-term corrections are healthy and expected after such a strong move, but unless macro conditions shift meaningfully, any retracement is likely to attract buyers. The long-term gold prices forecast remains constructive, supported by solid fundamentals and growing demand for safety.

Technically, taking out last week’s high at $3057.59 will signal a resumption of the uptrend with no upside targets. The nearest support is a minor bottom at $2832.72, followed by a key pivot at $2770.94. This level represents value so buyers are likely to step in on a pullback to this price.

Although we don’t see any headwinds, the market is still vulnerable to a near-term correction because of the increasing distance between the current price and the 52-week moving average at $2571.40. This is creating a “hot condition”, which could slow down the buying or even encourage some profit-taking. However, unless this indicator is taken out with conviction, the long-term uptrend should remain intact.

More Information in our Economic Calendar.