Gold Price Forecast: $3,700 Target in Sight as Fed Pause and War Risk Fuel Rally

Gold rose slightly on Wednesday, hovering around $3,386 as the dollar weakened and traders sat on their hands ahead of the Fed’s rate...

Written by: Arslan Butt • Wednesday, June 18, 2025 • 2 min read

• Last updated: Wednesday, June 18, 2025

Quick overview

Gold prices rose slightly to around $3,386 as the dollar weakened ahead of the Fed's rate decision.
Recent US economic data, including disappointing retail sales and housing numbers, increases pressure on the Fed for potential rate cuts.
Geopolitical tensions in the Middle East are driving safe-haven demand for gold, with increased ETF holdings reflecting this trend.
Technical analysis indicates resistance at $3,397, with a confirmed breakout needed for further upward movement.

Gold rose slightly on Wednesday, hovering around $3,386 as the dollar weakened and traders sat on their hands ahead of the Fed’s rate decision. The US dollar index fell 0.2% making gold more attractive to holders of other currencies. Despite the small gain, traders are cautious waiting for clarity from the Fed’s updated economic projections later today.

Recent data has added pressure on the Fed. May’s US retail sales fell more than expected, dragged down by a decline in auto sales and industrial production. With weak housing numbers, this supports the case for rate cuts later this year.

ANZ analysts said, “Gold fluctuated as investors tracked the escalation of risk in the Middle East. US macro data is soft.”

Middle East Conflict Adds to Safe-Haven Demand

Gold also got support from rising geopolitical tensions. Iran and Israel have been exchanging missile strikes for the sixth day, defying diplomatic calls to de-escalate. President Trump demanded Iran’s unconditional surrender while US officials confirmed extended military deployments in the region.

This uncertainty makes gold more attractive as a safe-haven. SPDR Gold Trust, the largest gold ETF, saw a 0.43% increase in holdings to 945.94 tonnes on Tuesday, reflecting increased demand.

Goldman Sachs reiterated its bullish call, forecasting gold to reach $3,700 by end 2025 and $4,000 by mid 2026, citing central bank demand and ETF inflows to accelerate once the Fed starts cutting rates.

Technical Setup: $3,397 Resistance to Watch

Gold (XAU/USD) is below the 50-EMA at $3,392 and struggling to break above the short-term resistance at $3,397. Despite multiple attempts, momentum is limited and the MACD is flat.

GOLD Price Chart - Source: Tradingview — GOLD Price Chart – Source: Tradingview

Support Zone: $3,373 (trendline and horizontal support)
Immediate Resistance: $3,397 and 50-EMA
Breakout Target (bullish): $3,422 and $3,451
Breakdown Risk: Below $3,373 could trigger $3,348 or $3,318

Wait for a confirmed break above $3,397 or a close below $3,373 for direction. With the Fed’s rate decision today, volatility may be high, trading opportunities may arise.

Gold is holding as we wait for the Fed’s decision, with weak US data and Middle East risk. Techs are mixed but macro and central bank flows could take us to $3,700.

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ABOUT THE AUTHOR See More

Arslan Butt

Lead Markets Analyst – Multi-Asset (FX, Commodities, Crypto)

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.