Gold (XAU/USD) kicked off the week on a powerful bullish note, smashing fresh all-time highs above $3,600 per ounce on Monday. The rally extends last week’s momentum as markets grow increasingly convinced the Federal Reserve (Fed) will deliver a rate cut at its September meeting. A string of weak US labor market figures has strengthened that view, sending investors flocking to safe-haven assets. Year-to-date, the yellow metal has gained nearly 38%, underscoring its status as a hedge against economic and geopolitical risks.
At the time of writing, XAU/USD trades around $3,635, buoyed by a softer US Dollar (USD) and mounting expectations of imminent Fed easing. Friday’s Nonfarm Payrolls report showed just 22K jobs added in August, sharply below the 75K forecast, while unemployment rose to 4.3%—the highest since 2021. Fed Chair Jerome Powell, in his late-August Jackson Hole speech, warned that downside risks to employment are growing, describing labor conditions as “a curious kind of balance” where both supply and demand for workers are weakening.
Central bank gold buying, geopolitical tensions, and global trade frictions are further amplifying demand. Policymakers’ credibility is being tested amid inflation concerns and questions over Fed independence, adding to the metal’s allure as a store of value.
Market Movers: Fed Bets, Global Politics, and Trade Risks
The US Dollar Index (DXY) is stabilizing near 97.75 after Friday’s selloff but remains under pressure. Treasury yields are steadying after last week’s drop: the 10-year hovers at 4.09%, its lowest since April, and the 30-year at 4.78%, while the 2-year remains under pressure at 3.51%, reflecting firm expectations of policy easing.
Futures markets now price a 90% probability of a 25 bps cut at the Fed’s September 16–17 meeting, with odds of a larger 50 bps move climbing to around 10%—up from nearly zero a week ago. Traders also expect up to three rate cuts by year-end, according to the CME FedWatch Tool.
Political developments are also in play:
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Japan: Prime Minister Shigeru Ishiba’s resignation has triggered a leadership contest, weighing on the Yen and nudging government bond yields higher.
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France: Prime Minister François Bayrou faces a confidence vote at 17:00 GMT after unveiling €44 billion in planned spending cuts. A defeat would leave President Emmanuel Macron to either form a new government from a fractured parliament or call snap elections—injecting fresh uncertainty into the Eurozone.
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US Trade Policy: Treasury Secretary Scott Bessent warned that if President Trump’s tariffs are overturned in court, the Treasury may need to refund up to $1 trillion by 2026, posing major disruption risks.
This week’s light US data calendar shifts focus to inflation releases. The Producer Price Index (PPI) is due Wednesday, followed by Thursday’s key Consumer Price Index (CPI). With a September cut seen as virtually assured, these figures will determine whether the Fed opts for a standard 25 bps move or considers a larger reduction.
Technical View: Uptrend Intact, Risks of Pullback
Gold’s breakout above $3,500 last week confirmed the continuation of its strong uptrend, with Monday’s surge extending gains toward $3,620.
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Momentum: XAU/USD trades comfortably above short- and medium-term moving averages, reflecting solid bullish control.
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Indicators: The Relative Strength Index (RSI) is in deep overbought territory, signaling scope for a corrective pullback even as the broader uptrend holds. The ADX above 30 confirms trend strength.
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Levels: Immediate support lies at $3,550, with stronger backing at $3,500. On the upside, the next psychological targets are $3,650 and $3,700.
Overall, Gold’s technical bias remains decisively bullish, though stretched momentum suggests traders should watch for short-term corrections.
