Gold Price (XAU/USD) Holds Above $3,350 Amid Dollar Strength and Powell’s Dovish Pivot

Fed Policy Outlook Shapes Gold’s Near-Term Path

The gold price (XAU/USD) is hovering near $3,365–$3,370 as markets digest Jerome Powell’s Jackson Hole remarks that tilted unexpectedly dovish. Powell noted that the “balance of risks” is shifting toward labor market weakness, with traders now pricing in an 85% probability of a 25 bps rate cut in September, up from 75% before his speech. Lower interest rates reduce the opportunity cost of holding gold, and that shift has underpinned the metal’s resilience above $3,350 despite intermittent dollar strength. Benchmark 10-year Treasury yields trade near 4.27%, while the U.S. Dollar Index (DXY) is consolidating just above 98, close to a four-week low. This dynamic—falling yields versus a still-firm greenback—is defining the near-term tug-of-war around gold’s direction.

Geopolitical Risk Lends Support to Safe-Haven Demand

Beyond monetary policy, geopolitical risks are injecting a safety premium into gold. Russia confirmed new Ukrainian drone strikes against energy and nuclear infrastructure in Kursk, while President Zelensky reiterated that Kyiv will “fight for freedom” on Independence Day. The escalation provides a geopolitical bid for gold, keeping safe-haven flows alive. At the same time, in Saudi Arabia, retail gold prices adjusted lower in local terms, reflecting the translation of global USD moves into regional markets. Gold traded at SAR 405.99 per gram, slightly down from SAR 406.84 on Friday, underscoring how shifts in the global market ripple across regional buyers.

U.S. Growth Data and Inflation in Focus

The market is now bracing for Thursday’s release of U.S. Q2 GDP, expected to show 3.0% annualized growth. A stronger print risks firming the dollar further and weighing on gold, while a downside surprise would validate Powell’s dovish tilt and likely accelerate bids into bullion. Additional catalysts include this week’s inflation, personal income, and jobless claims updates, all of which could further steer Fed expectations and, by extension, gold’s positioning into September.

Technical Setup: Range-Bound But Bullish Bias

Gold futures opened the week above $3,417.60, the first open above $3,400 since early August, and are holding near the 20-day EMA around $3,350. On the upside, the key resistance lies at $3,400–$3,410, followed by $3,439 (July high) and the psychologically critical $3,500. A decisive break above $3,500 opens the door to $3,550–$3,600, with some houses projecting $3,700 by year-end if Fed easing combines with central bank demand. On the downside, immediate support is at $3,315 (Aug 19 low), followed by $3,285–$3,268, near the 100-day EMA. A break of $3,245 would risk a deeper slide toward $3,200–$3,121. Indicators remain mixed: the RSI sits mid-range (40–60), suggesting indecision, while Bollinger Bands are tightening, implying a volatility breakout ahead.

Central Bank Demand and Structural Tailwinds

Structural demand remains a powerful theme. Central banks have been net buyers at 50-year highs, absorbing dips in bullion as part of diversification away from the dollar. At the same time, analysts highlight that U.S. gold reserves are at their lowest levels in 90 years, even as Treasury debt climbs to $36 trillion. Revaluation studies suggest that if U.S. gold holdings were marked against Treasury obligations at historical ratios, implied fair value could reach $25,000–$55,000 per ounce. While not immediate targets, these long-cycle comparisons highlight the imbalance underpinning long-term bullish calls.

Physical Demand and Seasonal Buying

In India, jewelers have begun seasonal stocking ahead of the festival period, but overall Asian demand remains uneven. Volatility above $3,400 has kept some retail buyers on the sidelines, though dips back toward $3,300 are sparking interest. Physical premiums in hubs like China remain elevated, signaling tight local supply despite fluctuating international benchmarks.

Gold Price Forecast: Bulls and Bears Square Off

Bulls argue that Powell’s dovish tone, the high probability of a September rate cut, and geopolitical uncertainty create the ideal backdrop for renewed momentum. The break above $3,400 strengthens the case for retests of $3,439 and a push to $3,500, with stretch targets at $3,700 by year-end. Bears counter that gold is vulnerable to stronger-than-expected GDP and inflation prints this week, which could revive the dollar and push bullion back toward $3,285 or even $3,245. A breakdown through $3,200 risks accelerating losses to $3,121, unwinding part of the summer rally. With volatility compressing, the standoff between bulls targeting $3,700 and bears eyeing $3,200 is about to resolve decisively.

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