Gold Price Analysis: XAU/USD Holds $3,400 Amid Fed Upheaval, Central Bank Buying, and Market Volatility

XAU/USD Pushes Higher After Powell’s Jackson Hole Signal

Gold (XAU/USD $3,410.80, +1.1%) opened Tuesday above the $3,400 threshold, extending a rebound triggered by Fed Chair Jerome Powell’s Jackson Hole speech. Powell emphasized that tariffs’ inflationary impact was likely temporary and hinted at a September rate cut, sending Treasury yields lower and the dollar weaker. The move gave bullion a $50 surge to $3,380 late Friday and follow-through buying pushed it to Tuesday’s open at $3,410.80 per ounce, not far from the April 22 all-time high of $3,485.60. In euro terms, the rally was less pronounced, underscoring that the U.S. dollar’s weakness was the primary driver.

Political Interference at the Fed Fuels Gold Demand

The removal of Fed Governor Lisa Cook by President Donald Trump jolted markets and deepened concerns over central bank independence. Such political moves suggest lower-for-longer rates, which historically bolster gold. Gold has already risen 35.9% year-over-year, from $2,509.90 in August 2024 to $3,410.80 today. The perception that the Fed is under pressure to ease aggressively raises the likelihood of further safe-haven flows into bullion. Traders are eyeing the core PCE index release on Friday, which could confirm or weaken the case for a September cut.

ETF Flows and Central Bank Demand Underpin Support

ETF flows, which had seen heavy outflows during the late July correction, have stabilized. Inflows into gold-backed ETFs in August resumed as global investors rotated back into safe-haven assets amid tariff risks and Fed turmoil. Central bank accumulation remains another critical driver: emerging market banks, particularly in Asia and the Middle East, continue diversifying away from the dollar. The World Gold Council reported that Q2 central bank demand hit record highs, supporting structural upside. Local currency moves are also highlighting demand: in the Philippines, gold rose to PHP 6,182.63 per gram and PHP 72,113.35 per tola, up from the previous day’s PHP 71,872.19 per tola, reflecting global price translation.

Mining Sector Activity Reflects High-Price Incentives

Exploration activity is accelerating with prices above $3,400. Legacy Minerals (ASX:LGM) secured approval for 4,500 meters of diamond drilling at Mt Carrington, a project with historical results of 12.82 meters at 48 g/t gold. The site, which closed in 1993 when gold was below $400, now looks viable with gold at nine times those levels. Legacy raised AU$7.75 million earlier this year, highlighting how elevated gold prices are revitalizing once-marginal projects. Additional assays at its Thomson project, showing long intersections of low-grade gold, point to broader exploration appetite underpinned by bullion strength.

Technical Picture: Key Resistance at $3,400 and Targeting $3,500

Technically, gold is consolidating gains just below $3,420, with the 20- and 100-period moving averages clustering between $3,340–$3,355, forming a potential bullish crossover. If sustained, the setup favors a push toward the $3,500 level, where breakout targets extend to $3,800. On the downside, support rests at $3,370, followed by $3,300 and $3,260, with $3,200 seen as the hard floor aligning with the 200-day EMA. The RSI remains positive but not overbought, indicating room for continuation if macro catalysts align.

Macro Events: Inflation and GDP Data to Decide Next Move

Markets await the U.S. Core PCE Index and the Q2 GDP revision later this week. A softer inflation print would validate rate cut bets and reinforce gold’s bid above $3,400. Stronger data could cool expectations, but geopolitical and political risks suggest downside is capped. Bond markets have already priced in a September cut almost fully, with additional easing in Q4, keeping pressure on the dollar and underpinning bullion.

Medium-Term Outlook Supported by Structural Shifts

Beyond short-term volatility, gold is in a powerful long-cycle uptrend. In the past month, futures gained 2% from $3,344 on July 25 to $3,410.80 today, while year-to-date performance exceeds +40%. Forecasts from major banks project prices reaching $3,700 by year-end 2025, citing record central bank demand and trade-war-induced dollar weakness. With legacy projects reopening and ETF inflows resuming, gold’s structural appeal remains strong, especially as political risks weigh on fiat credibility.

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