Gold closed the week higher for a fifth straight time, supported by the Federal Reserve’s recent rate cut, resilient physical demand, and persistent macroeconomic risks. Spot prices gained 1.15% to settle at $3,684.98 per ounce, just shy of the all-time high of $3,707.56.
Fed Policy Shift Keeps Bulls in Control
The Fed’s 25-basis-point cut to 4.00%–4.25% has reinforced the bullish outlook for gold. Chair Jerome Powell described the move as “risk management,” signalling flexibility in response to stubborn inflation and a softening labour market. Markets now anticipate at least two more cuts before year-end. Minneapolis Fed President Neel Kashkari added weight to those expectations, noting that further reductions are likely.
Dollar Strength and Yields Limit Momentum
Late in the week, a rebound in the US Dollar Index to 97.65 and firmer Treasury yields (10-year at 4.13%, 30-year at 4.74%) capped gold’s near-term gains. While these moves raise the opportunity cost of holding non-yielding assets, they have not derailed the underlying bullish structure.
Wall Street Ramps Up Forecasts
Analysts continue to lift their gold targets. Citi has raised its three-month forecast to $3,800, citing fiscal risks and a fragile jobs market. Deutsche Bank expects prices to average $4,000, pointing to strong central bank demand and persistent investor appetite. In India, physical gold premiums have surged to a 10-month high, underscoring robust consumer demand despite record prices.
Focus Turns to Core PCE and Sentiment Data
Markets are now braced for Friday’s release of the Fed’s preferred inflation gauge, Core PCE, along with the final University of Michigan Consumer Sentiment Index. July’s Core PCE rose to 2.9% year-on-year, the highest since February, while sentiment data has shown growing consumer concern over inflation and jobs. A strong PCE print combined with weak sentiment could fuel expectations of further Fed easing—providing another leg higher for gold.
Outlook: Bullish Above Key Levels
Technically, the bullish trend remains intact as long as gold holds above $3,311, with deeper support at the 52-week moving average near $3,046. A breakout above $3,707 would open the door to $3,800, $3,900, and potentially $4,000. With inflation sticky and safe-haven demand strong, the market bias remains firmly to the upside.
