Gold has maintained solid bullish momentum and, over the past five sessions, has gained more than 4.5%. Buying pressure remains supported by confidence in the metal as a safe-haven asset, in a context where U.S. labor market data has reinforced expectations of lower interest rates. As long as this outlook persists, gold will continue to gain appeal over U.S. Treasuries, potentially extending upward pressure in the short term.
How Much Will Fed Rates Fall?
The latest labor data showed greater deterioration than expected. In August, only 22,000 new jobs were reported, well below the 75,000 projected. Furthermore, the June revision revealed a loss of 13,000 jobs, confirming the first negative job growth since 2020. This reflects how persistently high rates are already creating negative effects on the labor market, further weakening the U.S. economy.
Source: CNBC
This scenario has made a rate-cutting cycle almost inevitable. According to CME Group, there is an 88.2% probability of a 0.25% cut in September, 73.9% in October, and 69.3% in December. If realized, the current 4.5% rate could drop to 3.75% before the end of 2025, consolidating a more dovish stance from the Fed.
Source: CMEGroup
The outlook for cuts is also weighing on 10-year Treasury yields, which have fallen from 4.2% to 4.0% in just a few sessions. With lower returns, Treasuries lose their appeal compared to gold, encouraging capital to shift out of bonds into the metal. This reinforces gold as the preferred safe haven and could sustain strong demand in the short term.
Source: TradingEconomics
Treasuries are traditionally gold’s main competitor as a safe-haven asset. However, as yields decline, investors find them less attractive, leading to consistent capital outflows into gold. This flow has boosted demand for the metal and reinforced its position as the most stable refuge during economic uncertainty.
If the outlook for lower rates continues and bond yields remain weak, gold could keep attracting significant capital flows, sustaining constant buying pressure on XAU/USD in the sessions ahead.
Gold Technical Outlook
Source: StoneX, Tradingview
- Bullish Momentum Holds: Since August 20, XAU/USD has consistently posted new record highs, confirming a dominant bullish bias on the chart. The move has been strong enough to keep gold in an aggressive buying cycle, though such strength may begin to show signs of exhaustion. If the price stabilizes at higher levels, technical corrections could emerge as the market consolidates gains before attempting to extend the trend further.
- RSI: the RSI line shows a clear upward slope and is already above the neutral zone, reaching overbought levels near 70. This reflects excessive buying pressure in recent sessions, suggesting the market may be in an imbalanced state. If RSI stays in this zone, there is a risk of short-term corrections in response to this overextension.
- MACD: both the lines and the histogram remain firmly above the 0 line, confirming that the short-term moving averages are still in bullish territory. This supports the continuation of the uptrend, though after such a dominant move, the possibility of short-term adjustments remains.
Key Levels to Watch:
- $3,700 – Tentative Resistance: a key psychological level and a round number reference. With no prior levels to guide it, this becomes the first barrier buyers must break. A decisive move above it would open the door to a more aggressive bullish trend.
- $3,500 – Near-Term Support: formed after a slight recent correction, this serves as the first line of defense against potential pullbacks. Holding above this area keeps the bullish structure intact, while a drop below could trigger a broader correction.
- $3,400 – Critical Support: formerly the top of a lateral channel that dominated for months, this level is now the most important to watch. A decline to this zone would put the aggressive bullish trend at risk and could mark a shift in the technical structure.
Written by Julian Pineda, CFA – Market Analyst
Follow him at: @julianpineda25
