Gold Weekly Forecast: US Inflation and Fed Outlook in Focus

Gold delivered one of its strongest performances in recent months, breaking above $4,300 and reaching its highest level since mid June. Falling US Treasury yields, a weaker US Dollar and reduced expectations for a Federal Reserve rate hike in September provided the main support for XAU/USD.

Attention now turns to the July US inflation report. The data could determine whether buyers can extend the rally or whether Gold enters a short-term corrective phase after its sharp advance.

Why Did Gold Rally?

At the beginning of the week, easing direct tensions between the United States and Iran pushed Oil prices lower. The decline in energy prices reduced immediate inflation concerns and helped ease pressure on bond markets. At the same time, disappointing US economic data encouraged investors to reassess the outlook for further monetary tightening.

US private sector employment increased by only 44,000 in July, below the market forecast of 70,000. The employment component of the ISM Services PMI also fell from 51.2 to 47.4, moving into contraction territory.

Following these releases, the market-implied probability of a September rate hike declined from nearly 70% to around 55%. Lower Treasury yields and renewed selling pressure on the US Dollar then created favorable conditions for Gold, while a break above recent resistance triggered additional technical buying and short covering.

The US Nonfarm Payrolls report strengthened this trend. The economy lost 23,000 jobs in July, compared with expectations for an increase of 80,000. June’s employment gain was also revised down from 57,000 to 20,000. The substantial weakness in the labor data increased expectations that the Fed could leave rates unchanged in September and helped Gold advance beyond $4,350.

US Inflation Is the Next Test for Gold Buyers

The main event in the week ahead will be Wednesday’s US Consumer Price Index report. Markets expect headline CPI to increase by 0.1% month on month, while core CPI is forecast to rise by 0.2%.

If monthly core inflation exceeds expectations, investors may reconsider the likelihood of a September policy hold. A recovery in Treasury yields and the US Dollar could then trigger profit-taking and a correction in Gold.

Conversely, a softer than expected core CPI reading would reduce the pressure on the Fed to raise rates. In that scenario, the Dollar could remain under pressure and XAU/USD may have room to extend its recovery.

Developments in the Middle East and the Strait of Hormuz will remain another source of volatility. A renewed escalation could lift Oil prices and inflation expectations across global markets. Gold’s reaction would therefore depend not only on safe-haven demand, but also on how higher energy prices affect Treasury yields, the Dollar and the Fed’s policy outlook.

Gold Technical Analysis

On the daily chart, the Relative Strength Index has climbed to its highest level since late January. Gold has also broken above the descending trend line drawn from early March, confirming a meaningful improvement in bullish momentum. However, the elevated RSI suggests that short term pullbacks may still occur after the recent surge.

The first major resistance is located near $4,390, where the 100 day Simple Moving Average comes into focus. A sustained break above this level could open the way toward the important $4,495–$4,510 area, which includes the 200 day SMA and the 38.2% Fibonacci retracement of the March August decline. If buyers clear that zone, the next upside target may emerge near $4,680.

The daily chart presents a more cautious picture. Bitcoin remains below the 50 day Exponential Moving Average at $64,632, the 100 day EMA at $67,018 and the 200-day EMA at $73,148. A decisive move through these resistance levels would be required to confirm a stronger bullish reversal.

Immediate support is located around $64,004. A daily close below this level, followed by a loss of the 200 week SMA, could expose the market to a deeper correction toward $60,000. In contrast, defending the current support area and breaking above $65,520 would provide the first meaningful confirmation that buyers are regaining control.

Bitcoin Weekly Outlook

ETF inflows and continued whale accumulation provide a constructive backdrop for Bitcoin, but the daily technical structure has not yet turned decisively bullish. Macroeconomic uncertainty and geopolitical risks also remain relevant.

The $63,776–$64,004 area is the key boundary between consolidation and a deeper correction. On the upside, a sustained break above $65,520 could improve sentiment and create room for a broader price recovery.

Risk Warning: This material is provided for informational and market-analysis purposes only and does not constitute investment advice or a recommendation to buy or sell any asset. Trading Gold and cryptocurrencies involves a high risk of capital loss. Always assess your financial circumstances and risk tolerance before making a trading decision.