Gold (XAU/USD) extended its rally to a fresh record above the $3,800 mark during Monday’s Asian session. The precious metal gained momentum after US inflation data aligned with expectations, reinforcing the view that the Federal Reserve (Fed) could move ahead with further rate cuts later this year. Lower interest rates typically reduce the opportunity cost of holding non-yielding assets such as gold, bolstering demand. Heightened geopolitical risks also continue to support the safe-haven appeal of the yellow metal.
Markets will closely watch comments from Fed officials later on Monday, with speeches scheduled from Governor Christopher Waller, Cleveland Fed President Beth Hammack, St. Louis Fed President Alberto Musalem, New York Fed President John Williams, and Atlanta Fed President Raphael Bostic. Any hawkish rhetoric could strengthen the US Dollar (USD), potentially weighing on gold’s upward momentum.
Daily digest market movers: gold climbs as US PCE data supports dovish outlook
The US Bureau of Economic Analysis reported Friday that inflation, measured by the Personal Consumption Expenditures (PCE) Price Index, rose to 2.7% year-on-year in August from 2.6% in July, in line with forecasts. Core PCE, which excludes food and energy, remained at 2.9% annually, unchanged from July and consistent with analyst expectations. On a monthly basis, headline PCE rose 0.3%, while core PCE advanced 0.2%.
“Monthly PCE data is in line, though personal income and spending were a tenth above expectations. Nothing from this data will prevent the Fed from carrying on with another cautious rate cut at the October meeting,” said Tai Wong, an independent metals trader.
According to the CME FedWatch Tool, markets now assign an 88% probability of a Fed rate cut in October and a 65% chance of an additional reduction in December.
Meanwhile, political risk is back in focus as President Donald Trump is set to meet congressional leaders at the White House on Monday. Without a funding deal, parts of the government could shut down on Wednesday, the start of the 2026 fiscal year.
Gold outlook: bullish momentum intact but overbought signals flash caution
Gold remains firmly in positive territory, holding above the 100-day Exponential Moving Average (EMA) on the daily chart, underscoring the broader bullish trend. However, the 14-day Relative Strength Index (RSI) stands near 75.90, deep in overbought territory, suggesting the potential for consolidation or a short-term correction before the next leg higher.
Immediate resistance for XAU/USD is located in the $3,800–$3,810 zone, a confluence of the psychological barrier and the upper Bollinger Band. A decisive break above this area could open the door to $3,850.
On the downside, initial support sits at $3,722, the September 25 low. A sustained move below that level would expose the next key floor at $3,632, the September 19 low.
