Gold (XAU/USD) extended its historic rally on Monday, breaking past the $3,800 mark for the first time and printing a fresh record near $3,833. At the time of writing, the yellow metal trades around $3,831, up 1.85% on the day, marking its seventh consecutive week of gains.
Momentum Fueled By PCE Data And Fed Outlook
After consolidating near $3,791 last week, bullish momentum returned on Friday following the release of the US Personal Consumption Expenditures (PCE) inflation report. While the data broadly met forecasts, inflation remains above the Federal Reserve’s 2% target, keeping focus on upcoming labor-market releases. Friday’s Nonfarm Payrolls (NFP) report is expected to provide fresh insight into the Fed’s policy trajectory.
Safe-Haven Demand And Market Drivers
Gold continues to benefit from a weaker US Dollar (USD), subdued Treasury yields, and heightened geopolitical risks. Uncertainty surrounding a potential US government shutdown and renewed tariff threats are further supporting safe-haven demand.
The US faces a shutdown risk from Wednesday unless Congress passes new funding measures. Political gridlock between House Republicans and Senate Democrats has delayed progress, with President Trump set to meet congressional leaders in a final effort to avoid disruption. Analysts warn that a prolonged shutdown could increase downside risks to growth and push the Fed toward a more accommodative stance.
Fed Commentary And Inflation Data
Cleveland Fed President Beth Hammack said on Monday that the Fed must maintain a restrictive stance as inflationary pressures, especially in services, remain persistent. She also cautioned that tariffs are unlikely to have a “one-time” impact.
Meanwhile, the core PCE Price Index rose 0.2% MoM in August, matching expectations, while headline PCE climbed 0.3%. Annual inflation ticked up to 2.7% from 2.6%, keeping the Fed’s inflation fight in sharp focus.
Technical Analysis
XAU/USD has broken decisively above resistance at $3,800 after consolidating sideways last week. The breakout is reinforced by strong momentum, with price action well above the 21- and 50-period Simple Moving Averages (SMAs) on the 4-hour chart.
Support is now seen at the breakout zone around $3,800, followed by $3,761 (21-SMA) and $3,726 (50-SMA). Sustained trade above $3,800 keeps the bullish bias intact, with upside targets at $3,850 and higher.
The Relative Strength Index (RSI) near 73 highlights strong buying interest but also signals overbought conditions, raising the risk of a short-term pullback. A dip below $3,800 could spark profit-taking yet is likely to attract renewed demand around the breakout level.
