Gold (XAU/USD) extended its two-week rally to reach a fresh record high around the $3,546–3,547 zone during Asian trading on Wednesday. Expectations of a Federal Reserve rate cut this month, coupled with ongoing trade uncertainties, have underpinned demand for the non-yielding safe-haven asset.
However, gains slowed as the US Dollar (USD) maintained its recovery for a second straight session. Pressure on the British Pound (GBP) and Japanese Yen (JPY) from fiscal concerns provided the USD with support, limiting further upside for Gold amid stretched overbought conditions. Caution also set in ahead of Friday’s closely watched Nonfarm Payrolls (NFP) report, which could shape the Fed’s policy outlook.
Market drivers
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According to the CME FedWatch Tool, traders assign a 90%+ probability of a 25-basis-point Fed rate cut at the September 17 meeting, with expectations of at least two cuts this year.
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Political risks added to market uncertainty as US President Donald Trump pushed for faster rate cuts and moved to remove Fed Governor Lisa Cook, raising concerns about the Fed’s independence.
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Trump also announced plans to seek an expedited Supreme Court ruling on tariffs deemed unlawful by a US appeals court last week, further clouding the outlook and boosting Gold’s safe-haven appeal.
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Rising fiscal deficits, stubborn inflation, and weakening central bank credibility have driven global bond yields higher, fueling anxiety over government finances. This pressured the Pound and Yen, while lending the USD additional strength.
Investors now turn their attention to US JOLTS Job Openings data later today, followed by Thursday’s ADP employment report and ISM Services PMI. The week’s main event remains Friday’s NFP, which could dictate Gold’s next major move.
Technical outlook
The breakout above the $3,500 psychological level confirmed last week’s move out of a three-month range and favors continued upside. Still, the daily RSI shows overbought conditions, suggesting a period of consolidation or a mild correction is likely before the next leg higher.
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Support levels: Initial support lies near $3,500, followed by $3,440. A drop below the latter could trigger technical selling toward $3,400.
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Resistance levels: The $3,546–3,547 region marks immediate resistance, with the next target at $3,600, the measured move from the recent breakout.
Overall, while momentum remains bullish, Gold may pause or retrace modestly before attempting to extend its rally into uncharted territory.
