Gold (XAU/USD) extended its record-setting rally on Monday, hitting a fresh all-time high near $3,950 during the European session. The precious metal remains well-bid as investors grow increasingly confident that the Federal Reserve (Fed) will deliver further interest rate cuts before year-end.
Fed rate cut expectations strengthen
According to the CME FedWatch Tool, markets are pricing an 84% probability that the Fed will lower rates by 25 basis points (bps) at each of its two remaining policy meetings in 2025, amounting to a total reduction of 50 bps.
The prospect of lower borrowing costs continues to bolster demand for non-yielding assets such as gold, which benefits when real yields decline. Fed dovish expectations have intensified amid soft US labor market conditions following the tariffs imposed by President Donald Trump, which have weighed on business sentiment and hiring.
Mixed Fed commentary and political risks
While markets lean heavily toward further easing, not all Fed officials share that conviction. Chicago Fed President Austan Goolsbee cautioned against overly aggressive rate cuts, citing persistent inflation pressures in the services sector. “You see this uptick in inflation, particularly in services, which is probably not coming from tariffs,” Goolsbee said, adding that he is “a little wary about front-loading too many rate cuts and just counting on inflation going away.”
Meanwhile, the ongoing United States (US) government shutdown has amplified safe-haven demand, further lifting gold prices. The White House has warned that mass layoffs of federal employees are already underway. “It’s taking place right now,” President Trump told reporters on Sunday when asked about the timing of staff reductions.
Technical analysis: bulls eye $4,000 next
Gold continues its remarkable eight-week winning streak, maintaining a strong bullish bias. The 20-day Exponential Moving Average (EMA) is trending higher around $3,751.20, reinforcing support for the uptrend. Additionally, the upward-sloping trendline from the August 22 low near $3,321.50 acts as another key technical floor.
The 14-day Relative Strength Index (RSI) remains elevated within the 60–80 range, signaling persistent bullish momentum. On the upside, a sustained break above $3,950 could pave the way for a test of the psychological $4,000 mark, while immediate support rests at the rising 20-day EMA.
