Gold (XAUUSD) Price Forecast: Will Core PCE Fuel a Rally or Signal Further Losses?

Political Turmoil Ignites Record-Breaking Rally

Gold extended its historic rally this week, surging to an all-time high of $3,500.20 per ounce before easing. President Trump’s scathing attack on Fed Chair Jerome Powell, calling him a “major loser” and demanding immediate rate cuts, triggered a chain reaction across markets. The dollar collapsed to three-year lows, equities fell sharply, and bullion soared as fears over Fed independence rattled investor confidence.

Unlike past sell-offs where gold faced liquidation pressure, this rally showed resilience. Financial market stress failed to generate margin call selling in bullion, highlighting strong conviction among holders. Investors aggressively bought gold as a safe haven against political volatility and perceived monetary policy manipulation.

Technically, last week gold formed a potentially bearish weakly closing price reversal.  This is not a change in trend, but rather a shift in momentum.

A trade through $3500.20 will negate the chart pattern and signal a resumption of the uptrend. However, a trade through $3260.19 will confirm the weakness, setting up a possible extension into a pivot at $3166.46. This is followed by another pivot at $3018.52.

Buyers are likely to show up on a break into the pivots since the uptrend remains well supported by the 52-week moving average at $2655.44.

Last week, XAU/USD settled at $3319.34, down $8.03 or -0.24%.

Unrelenting Dollar Weakness Amplifies Gold Demand

Gold’s climb accelerated early in the week as the dollar broke down further and trade policy concerns intensified. Currency weakness made gold cheaper internationally, drawing stronger global demand. With capital exiting U.S. assets on growing fears of economic mismanagement, gold’s appeal as a hedge surged.

By Tuesday, the perfect storm pushed XAU/USD into uncharted territory. With no technical ceilings above, gold traded freely at record levels as traditional market patterns broke down.

Profit-Taking Sets in but Macro Backdrop Stays Supportive

Wednesday’s pullback was inevitable after extreme gains. Trump’s softer tone on Powell and openness to tariff reductions sparked temporary risk-on sentiment. Gold retreated as equities bounced and the dollar recovered. By Thursday, opportunistic buyers returned, stabilizing gold prices heading into the weekend.

Despite volatility, gold’s core fundamentals remain solid. The IMF warned about U.S. growth risks tied to tariffs, while the Fed held rates steady, citing economic uncertainty. Institutional demand stays strong, and low real rates continue providing underlying support.

Key Economic Data Could Dictate Gold’s Next Move

The upcoming week brings critical data. Core PCE inflation is forecast to show persistent pressures, and Q1 GDP growth is expected at a modest 0.4%. If inflation beats estimates or growth disappoints, gold could regain upside momentum.

Non-farm payrolls are expected to add just 129,000 jobs—down sharply from prior months. A weaker jobs report would boost recession fears and safe-haven buying. Traders will also monitor ISM manufacturing PMI (expected at 48.0, signaling contraction) and consumer confidence (forecast at 87.4), both key sentiment indicators.

Gold Prices Projection: Consolidation Before Potential Breakout

Gold is likely to consolidate further as traders digest political and economic signals. However, the structural bullish case remains intact, supported by persistent inflation concerns, Fed uncertainty, and ongoing dollar weakness. The pullback presents a strategic opportunity for buyers, with the longer-term gold prices forecast remaining decidedly bullish.

More Information in our Economic Calendar.