Gold Price Forecast: XAU/USD stays close to fresh highs above $3,850

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Gold price reached a fresh all-time high of $3,871 on Tuesday.
Bullion gained support as soft US jobs data raised expectations of Fed rate cuts.
The safe-haven Gold attracts buyers due to worries over a potential US government shutdown.

Gold price (XAU/USD) continues its winning streak for the fifth successive session, hovering, during the Asian hours on Wednesday, around its fresh all-time high of $3,871 per troy ounce, which was recorded on Tuesday. The price of the non-interest-bearing bullion received support as soft United States (US) jobs data increased the odds of Federal Reserve (Fed) rate cuts.

Gold is showing remarkable resilience again, effortlessly clawing back early losses after uninspiring US Job Openings and Labor Turnover Survey (JOLTS) that won't stand in the way of another rate cut in a month," Reuters cited an independent metals trader Tai Wong.

The latest Job Openings in the US showed the labor market is slowing, yet vacancies rose from 7.21 million to 7.23 million in August. Meanwhile, the hiring rate edged down to 3.2%, the lowest level since June 2024, while layoffs remained at a low level.

The CME FedWatch Tool suggests that markets are now pricing in nearly a 97% chance of a Fed rate cut in October and a 76% possibility of another reduction in December. Rising expectations of further Fed rate cuts weighed on the US Dollar (USD), making Gold cheaper for overseas buyers and boosting bullion demand.

Gold price found support amid concerns over a looming US government shutdown. Washington prepared for the risk on Tuesday, with Republicans and Democrats still deadlocked and unlikely to reach a deal before the midnight funding deadline. The US Labor Department said Monday that its statistics agency would suspend data releases, including Friday’s closely watched monthly jobs report, if a partial shutdown occurs," per Reuters.

Gold FAQs

Why do people invest in Gold?

Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.

Who buys the most Gold?

Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.

How is Gold correlated with other assets?

Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.

What does the price of Gold depend on?

The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.