Gold (XAU/USD) consolidates near $3,650 on Friday after rebounding from Thursday’s pullback, holding just below this week’s all-time high of $3,675. The precious metal remains range-bound but is on track for a fourth consecutive weekly gain, supported by a weaker US Dollar (USD) and growing certainty that the Federal Reserve (Fed) will cut rates at next week’s meeting.
Fed expectations underpin gold demand
Recent US economic data have reinforced expectations of an imminent Fed rate cut. August Consumer Price Index (CPI) data showed headline inflation slightly above forecasts, but broader indicators suggest a slowing economy. Nonfarm Payrolls (NFP) growth nearly stalled in August, previous job gains were revised sharply lower, and Initial Jobless Claims rose to multi-year highs. Producer price pressures have also softened.
These factors outweigh lingering inflation concerns, highlighting increasing downside risks to employment and solidifying the market’s view that the Fed is likely to reduce rates by 25 basis points on September 17. CME FedWatch Tool currently assigns a +90% probability to a rate cut.
Safe-haven demand supported by geopolitical and trade tensions
Global trade friction and geopolitical risks continue to support Gold as a safe-haven asset. US tariff revenues hit a record $30 billion in August under the current reciprocal tariff regime. Reports indicate the US is pressing G7 allies to impose tariffs on China and India over continued Russian oil imports, maintaining market uncertainty and bolstering demand for the metal.
The University of Michigan’s preliminary September survey showed Consumer Sentiment declining to 55.4 from 58.2, with inflation expectations rising—one-year expectations steady at 4.8% and five-year expectations up to 3.9% from 3.5%—highlighting persistent household concerns over the economic outlook.
Technical outlook: XAU/USD consolidates below record highs
Gold is consolidating between $3,620 and $3,650 on the 4-hour chart, pausing after its strong rally earlier this week. Immediate support is provided by the 21-period SMA near $3,640, with the 50-period SMA around $3,596 and the $3,600 psychological level offering a stronger cushion.
On the upside, resistance lies at the current range top near $3,650, followed by the record high at $3,675. A break above this zone could open the path toward the psychological $3,700 level.
Momentum indicators support ongoing bullishness despite the consolidation. The RSI hovers around 61, reflecting stabilized momentum, while the ADX remains elevated at 42, indicating the underlying trend remains strong even if directional intensity has eased slightly.
