Gold prices have extended their weekly gains to 3.5% and also a seventh successive green trading day. With bond yields rising and interest rate cuts coming, market participants are facing a host of uncertainties.
Add to the mix the renewed uncertainty around US tariffs with many of them ruled illegal by a Federal appeals court last Friday and market jitters are at a peak.
Rate Cut Expectations Continue to Rise
The current macro economic backdrop is a complicated one. Recent developments globally continue to point toward unfavorable scenarios from fiscal issues in Europe and Fed independence concerns in the US.
Since Fed Chair Powell’s Jackson Hole speech, rate cut expectations have continued to rise. Fed Chair Powell de facto admitted that employment risks have overtaken inflation concerns underlining the importance of Friday’s jobs data.
It would take an extraordinary print to dampen market expectations significantly with the Fed expected to cut rates by 25 bps at the upcoming September 17 Fed meeting. LSEG data currently shows a 95% probability while the implied rate has also seen potential rate cuts climb from around 40 bps to around 57 bps through December 2025.
Source: LSEG
Any decision by the Fed may also come with a bit of controversy. Given that inflation remains well above the Fed target of 2% (despite comments by some Fed policymakers of a higher neutral rate moving forward), the discussion will be around whether the decision has been influenced by US President Donald Trump and the Feds independence.
The constant attacks on the Fed by the Trump administration as well as the firing of Lisa Cook have raised many eyebrows.
Gold ETF Inflows Soar, Geopolitical Risks Rise
Market participants have been putting a lot of money into exchange-traded funds (ETFs) that are backed by gold. The SPDR Gold Trust GLD, which is the biggest gold ETF, reported that its gold holdings have gone up to 977.68 tons. This is a 12% increase for the year and the highest it’s been since August 2022.
While another factor aiding Gold’s surge is increasing Geopolitical risk. The Russia/Ukraine situation continues to bubble as European leaders maintain a combative approach and President Putin continues to blame the West for the conflict.
Comments this week from both Saudi sources and UAE sources around Israel and the occupation of Gaza City and potential annexation of the West Bank threaten further turmoil in the Middle East.
“Annexation in the West Bank would constitute a red line for the UAE,” Lana Nusseibeh, Assistant Minister for Political Affairs at the UAE’s foreign ministry, said in a statement. “It would severely undermine the vision and spirit of (the Abraham) Accords, end the pursuit of regional integration, and would alter the widely-shared consensus on what the trajectory of this conflict should be – two states living side by side in peace, prosperity, and security.”
These renewed risks are all adding to the current pot of risks which are brewing and keeping market participants on edge and safe haven flows strong.
How far can this rally go? Well the NFP will give us an answer. A poor NFP print could increase expectations for a 50 bps cut which, no matter how unlikely, could inject further fuel to the Gold rally.
A strong print will have an impact but unless it is something out of this world is unlikely to lead to a huge correction. The size and pace of the rally could see a surge in profit taking post NFP which should also be considered.
Technical Analysis – Gold (XAU/USD)
From a technical standpoint, it is very difficult to pick a top at the moment. Not to mention that the lack of historical price action makes it near impossible.
In such cases and for Gold I tend to focus on the whole numbers (psychological) and the 25, 50, 75 areas as potential support resistance areas. What I mean is I look at 35753550 or 3525 etc.
Looking ahead, the first point of interest will be the 3600 mark before the 3625 and 3650 areas catch my attention.
Looking at the downside, it’s a similar story.
Gold (XAU/USD) Daily Chart, September 3, 2025
Source: TradingView (click to enlarge)
Dropping down to a one hour chart for any help identifying short-term support areas.
There was a spike and rejection twice around the 3546 area which rests just below an area I like which is 3550.
Below that we have the 3527 spot and then the 50-day MA may come into focus which rests at 3515.
Gold (XAU/USD) One-Hour Chart, September 3, 2025
Source: TradingView (click to enlarge)
Client Sentiment Data – XAU/USD
Looking at OANDA client sentiment data and market participants are Short on Gold with 69% of traders net-short. I prefer to take a contrarian view toward crowd sentiment and thus the fact that the majority of traders are net-short suggests that Gold prices could continue to rise in the near-term.
