Gold Price Prediction: Fed cuts, geopolitical fuel rally

Gold (XAU/USD) latest rally has been driven by three familiar themes: rising expectations for further U.S Federal Reserve rate cuts, mounting geopolitical stress, and steady demand from central banks. Together, they have built a powerful tailwind that could keep buyers in control.

With momentum still firm, traders are no watching whether gold can push through $3800, $3,900 and the key $4.000 psychological resistance barriers.

Rate Cut Expectations and Central Banks Demand Boost Gold

Market sentiment remains buoyant as investors are now betting on two additional Fed rate cuts before the end of 2025. Last week’s 25 basis-point reduction lit a spart under the market. Kitco Metals’ senior analyst Jim Wyckoff summed it up neatly:” Expectations for further easing are underpinning gold prices into year-end”.

Geopolitical risks are reinforcing the story. The war in Ukraine shows no sign of resolution, with Russia’s defense ministry reporting new territorial gains. Safe haven flows are pouring back into bullion as a result.

On top of that, central banks remain active buyers. Societe Generale estimates they have already added 63 tons of gold this year, in line with the post-2022 average. After a slowdown earlier this year, China in particular has sharply increased its imports, offsetting declines in U.S. inflows due to new tariffs.

Fed Officials Signal Diverging Views

A stream of Fed commentary has added nuance to policy expectations.

• (Atlanta Fed) Raphael Bostic expressed concern over inflation and pushed back against an immediate October cut, though he acknowledged rising labor market risks.
• (St. Louis Fed) Musalem supported pre-emptive easing to protect jobs, while noting tariffs are worsening inflation.
• Governor Milan argued current policy is overly restrictive, suggesting a neutral rate near 2%.
• (Richmond Fed) Barking flagged that tariffs are being partly absorbed by consumers.
• (Cleveland Fed) Harker highlighted that inflation risks outweigh labor-market weakness, describing the job market as “low hiring, low firing.”

This divergence reflects a Fed still divided, even as markets assign a 90% probability of a 25-bp rate cut at the October 19 FOMC meeting (Prime Market Terminal Data).

Bond Yields Rise but Gold Defies Gravity

U.S Treasury yields climber on Monday, with the 10-year yield up 1.5 bps to 4.145% and real yields edging up to 1.755%. Ordinarily, higher yields would weigh on non-yielding gold. Yet bullion’s resilience highlights the strength of safe-haven flows and rate-cut speculation.

Notably, U.S. tariffs on imported bullion have sharply curtailed Swiss exports, plunging 99% in August, but Chinese demand filled the gap, with shipments surging from 9.9 tons to 35 tons, the highest since May 2024. Exports to India also increased, underscoring a global rebalancing of gold flows.

Technical Analysis: Key Levels in Focus

Gold remains firmly bullish after its breakout, with price holding above the $3,733 support zone. As long as this level is defended, upside momentum remains intact.

• Immediate support: $3,733. A failure to hold here could trigger a deeper pullback toward $3,478.
• First resistance: $3,876. A decisive break above this level would open the door to $3,900.
• Major support: $3,478. Losing this area would shift sentiment bearish, exposing $3,400 – $3,360.

Overall, the structure favors further upside as long as price stays above $3,733. A confirmed breakout above $3,876 would likely accelerate the move toward the $3,900 – $4,000 psychological zone.

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