Gold forecast: XAU/USD tests $3,000 hurdle as dollar weakens

• Gold forecast strengthens as falling yields and dollar lifts gold to $3K
• Trade war fears and central bank risks underpin demand
• Eyes on central bank rate decision as US data disappoints again

Gold burst to the $3,000 per ounce threshold last week – a landmark moment for the precious metal. After Friday’s breakout, a modest retreat followed as traders pocketed profits, but gold remains perched near its highs as Monday’s European session heads to the close. A faltering US dollar and heightened risk aversion, courtesy of Trump’s latest trade brinkmanship, continue to drive demand. The gold forecast remains bullish, but with rate decisions from the Fed, Bank of England, and Bank of Japan due this week, we could see some profit-taking in the near-term outlook. Should policymakers hint at softer stances, expect gold to catch another tailwind. On the flip side, any signs of geopolitical détente could cool safe-haven demand, especially with equities clawing back lost ground since Friday’s reversal.

Safe-haven fever sends gold to $3K, but what now?

Gold has long been the market’s insurance policy, and recent years have offered no shortage of catalysts. From the Covid-induced panic to war in Ukraine and spiralling inflation, gold has shone through every crisis. Trump’s fresh protectionist push has only added fuel to the fire, with his tariff playbook rattling markets globally. As Wall Street’s rally faltered under the weight of uncertainty, bullion continued to soak up the inflows. But what now? With gold at $3K, and equities bouncing back a tad, don’t be surprised if prices were to ease off a tad. But the underlying trend will remain bullish unless we start to see lower lows and lower highs.

Dollar’s decline keeps gold bears at bay

The weakening greenback has offered another leg of support for gold. February’s weak retail sales and a grim Empire State Manufacturing Index print have heightened fears of a slowdown today. Last week, it was softer CPI and PPI data, coupled with sagging consumer sentiment, all leaving the dollar vulnerable. But at the same time, inflation expectations are creeping higher, which is raising the stakes for the Fed’s next move.

Eyes on the central banks

The Bank of Japan, the Federal Reserve, and Bank of England now take centre stage. Should dovish surprises emerge, particularly from the Fed or BoJ, it could hand gold the ammunition for another leg up. With markets already pricing in BoE cuts later this year, sterling’s trajectory will also be worth watching.

Technical gold forecast: Bulls still calling the shots

Source: TradingView.com

The technical backdrop on the XAU/USD chart remains encouraging for the bulls. And why wouldn’t it when prices are at record highs? Gold’s climb to $3,000 is significant, but resistance lingers at this level. A decisive breakout could see targets at $3,032 and $3,043 come into play. These Fibonacci-based targets are derived from past price swings. Support now lies around $2,929-$2,956, the most recent resistance area that finally gave way last week. Speaking of last week, the low of that week was made on Tuesday at $2,880 – making this the key to holding the bullish bias. IF we go below it, the near-term technical gold forecast will flip to bearish.

The takeaway

Gold is basking in the glow of a perfect storm: geopolitical tensions, soft US data, and central bank uncertainty. While some consolidation and some pullback may occur at or around the $3,000 level, the longer-term trend still favours the bulls.

-- Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R

-- Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R