Weekly Gold Price Outlook: XAU Soars 37% in 2025, Is $4,000 the Next As FED Pivots?
Gold is once again in the spotlight, climbing to record highs as a weakening U.S. economy and dovish Federal Reserve outlook drive...
Quick overview
- Gold prices have surged to record highs, reaching $3,674 per ounce, driven by a weakening U.S. economy and dovish Federal Reserve outlook.
- The August Nonfarm Payrolls report showed disappointing job growth, leading to increased expectations for interest rate cuts by the Fed.
- Political pressures on the Fed have raised concerns about central bank independence, further boosting demand for gold as a safe-haven asset.
- Analysts suggest that if current trends continue, gold could test $4,000 per ounce by the end of 2025.
Gold is once again in the spotlight, climbing to record highs as a weakening U.S. economy and dovish Federal Reserve outlook drive investors toward safe-haven assets.
Gold Rally Extends to Historic Highs
Gold surged to unprecedented levels last week, with spot prices climbing to $3,674 per ounce and futures briefly pushing above $3,700 for the first time. The rally, fueled by dovish Federal Reserve signals and weaker U.S. labor market data, marks a continuation of the broader uptrend that began earlier this year. In Asia, jewelry prices followed the global surge, with Chinese gold retail prices nearing CNY 1,070 per gram.
Fed Policy, Jobs Data, and Market Expectations
The August Nonfarm Payrolls report revealed that the U.S. economy created only 22,000 jobs, far below expectations of 75,000. Unemployment ticked up to 4.3%, the highest since 2021, while weekly jobless claims rose to 237,000. These indicators of labor market weakness strengthened market bets that the Fed will cut rates at its September 17 meeting.
Investors now expect at least a 25 basis point rate reduction, with some speculating about the possibility of a more aggressive 50 bps cut. The dovish expectations weighed heavily on the U.S. dollar, which slid to 98.00 on the DXY index, while Treasury yields also declined—both reinforcing gold’s appeal as a non-yielding safe-haven asset.
Political Pressure on the Fed Adds Fuel
Beyond economic signals, political developments are adding to gold’s momentum. Concerns over central bank independence have resurfaced after attempts to remove Fed Governor Lisa Cook and public criticism of Chair Jerome Powell by President Trump. This raised fears of political interference in monetary policy, undermining confidence in the dollar and driving further demand for gold.
Technical Picture: Road to $4,000
From a technical perspective, momentum remains strongly bullish. The 100-week SMA acted as a springboard after the Fed’s August pause, while longer-term support continues to be underpinned by the 20-month SMA. Analysts argue that if current conditions persist, a test of $4,000 per ounce before the end of 2025 is increasingly plausible.
XAU Chart Weekly – The 20 SMA Acting As Support
Adding to the bullish case, central banks remain heavy buyers. For the third consecutive year, global purchases have exceeded 1,000 tons, with 2024 setting a record at 1,086 tons. China, India, and Poland have led the charge, with Poland’s central bank explicitly targeting an increase of gold reserves from 16.9% to 20%. China’s official holdings stood at 74.02 million ounces as of August 2025.
Key Events to Watch This Week
This week is packed with four major central bank announcements, each with the potential to shift global market sentiment. While the Fed and BoE will likely dominate headlines, the BoJ decision on Friday could be the real wildcard. Investors should brace for heightened volatility in FX markets and cross-asset moves as policy divergences become clearer.
Wednesday – FOMC & Bank of Canada Decisions
The U.S. Federal Reserve’s policy statement will be closely watched for signals on the pace and timing of interest rate cuts. Markets are pricing in three quarter-point cuts this year, but any hint of caution could trigger volatility across equities, bonds, and the U.S. dollar.
The Bank of Canada is also set to announce its rate decision, with investors debating whether recent inflation trends justify further easing. A surprise move could ripple through commodity currencies like CAD.
Thursday – Bank of England Policy Meeting
The BoE is navigating sticky inflation and slowing growth. Traders will be on alert for whether the central bank leans more dovish, especially as the U.K. economy shows signs of cooling. The GBP could see sharp swings depending on forward guidance.
Friday – Bank of Japan Decision
The BoJ remains the outlier among major central banks, still maintaining ultra-loose policy. Any shift toward tightening or fresh comments on yield curve control will be critical for the yen, global bond markets, and carry trades.
Outlook: Gold’s 37% year-to-date rally reflects a unique mix of monetary policy shifts, geopolitical uncertainty, and record central bank demand. Whether this momentum represents temporary volatility or the start of a new era for the precious metal, the Fed’s upcoming decision will likely determine whether the path to $4,000 accelerates.
Gold Live Chart
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