Gold is closing in on a critical breakout zone, ending last week at $3,397.77 and holding just shy of a two-week high at $3,409.43. Traders are now laser-focused on this week’s July CPI release, which could determine whether XAU/USD extends its rally toward the $3,500 mark — or retreats back toward key support levels.
📌 Key Drivers Behind Gold’s Rally
- Dovish Fed Expectations at 90%+ Probability
The latest U.S. payrolls report showed only 73,000 jobs added in July, with major downward revisions to previous months. This weaker labor data has fueled market expectations for an imminent September interest rate cut, with the CME FedWatch Tool pricing in two to three additional cuts before year-end. - Political Influence Over the Fed
President Trump’s removal of the Bureau of Labor Statistics chief and nomination of Stephen Miran to the Federal Reserve Board has intensified speculation that monetary policy may shift in a more accommodative direction. - U.S. Dollar Weakness
The Dollar Index (DXY) fell 0.43% last week to 98.264, increasing gold’s appeal for overseas buyers. While 10-year Treasury yields rose to 4.285%, safe-haven demand remains intact due to global uncertainty. - Escalating Trade Tensions
The U.S. has rolled out aggressive “reciprocal” tariffs, including 50% on Brazilian and Indian imports, and 25–35% on Canadian and Mexican goods. Retaliation threats are heightening global risk sentiment, which historically supports gold prices.
📅 This Week’s Focus: July CPI Release
The July CPI report, due Tuesday, will be a major catalyst for gold’s next move:
- If CPI is softer than expected → Fed cut expectations will strengthen, gold could break above $3,409.43, targeting $3,451.53 and the $3,500.20 milestone.
- If CPI is hotter than expected → The dollar may rebound, yields could climb, and gold might retreat toward the $3,310.48 pivot. A break lower would expose $3,268.12 and $3,244.41.
📊 Gold Technical Outlook
- Weekly Pivot: $3,310.48 — above this, bias remains bullish; below, short-term tone turns defensive.
- Resistance Levels: $3,409.43 • $3,451.53 • $3,500.20
- Support Levels: $3,310.48 • $3,268.12 • $3,244.41
With the Fed in a wait-and-see mode and the dollar still vulnerable, CPI data is likely to be the decisive trigger for gold’s next big move.
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