Gold (XAUUSD) at the top: Gains backed by rate cut expectations

Gold appears today to be at a historic crossroads between continuing its upward trajectory and a potential correction warning.

While the current moves represent a real opportunity for traders, the risk of a bull trap remains high.

Prices have approached roughly $3,680–3,850 per ounce, after the yellow metal registered a fresh all-time high near $3,681.63 on Monday, reflecting strong underlying momentum.

Gold is now consolidating in a narrow range near these elevated levels, awaiting cues from central banks, particularly the highly anticipated U.S. Federal Reserve decision on Wednesday.

I expect the Fed to cut interest rates by 25 basis points as widely priced in, with a slim chance of a larger cut — though that is unlikely at this stage given the mixed U.S. data: labour market signals are softening, yet inflation remains somewhat sticky.

If the Fed does cut rates and Chair Jerome Powell delivers a cautious but dovish message, gold could test the $3,700–$3,750 zone and potentially push even higher, barring any upside surprises in inflation data or a sudden rebound in the U.S. dollar.

Investors are also watching for the impact of other monetary policy announcements this week: the Bank of Canada, the Bank of England, and the Bank of Japan all have meetings that could disrupt gold’s temporary consolidation. Any surprises — especially if the BoE or BoJ adopt a more hawkish tone on inflation risks or growth concerns — could lift the dollar and trigger capital flows away from gold. In my view, the main risk is that gold could face a sharp downside reaction if market sentiment turns risk-on or if U.S. data beats expectations.

Geopolitical tensions continue to provide a solid floor for gold. The ongoing conflict in Ukraine, Russian military actions, and Middle East flare-ups are keeping gold supported as a safe-haven asset, prompting investors to rotate out of riskier assets. This geopolitical backdrop may shield gold from deep pullbacks even if short-term technical corrections occur. However, it is worth noting that overbought conditions on short-term charts signal a potential near-term pullback; indicators such as RSI and EMAs show stretched momentum that could trigger a pause or dip before a strong breakout.

In conclusion, I believe gold still has a favourable medium-term outlook, with $3,700 as an initial upside target after the Fed decision, and an extension toward $3,750–$3,800 not out of the question if the policy guidance remains dovish. Still, traders must remain agile: any indication from the Fed of a more cautious stance, or unresolved inflationary pressure, could send prices back toward $3,600–$3,650 as a strong support zone — or even lower in the event of external shocks.

Ultimately, gold presents a strong but risky opportunity — only disciplined traders and investors who manage risk carefully should take positions here. Latecomers chasing the rally may find themselves trapped at high levels. Now is the time to read the signals closely: the Fed decision, other central bank policies, and upcoming economic data will serve as the true catalysts for gold’s next major move.

Technical analysis of Gold ( XAUUSD ) prices

The four-hour chart of Gold/U.S. Dollar (XAU/USD) shows a strong continuation of bullish momentum within a clear five-wave impulse structure, with prices currently approaching the completion of the fifth wave near the 3,700 level. The price has been moving within an ascending channel since breaking the key support at 3,450 (0.65 Fibonacci retracement), indicating that buyers are in control of the market in the short to medium term. Staying above the main moving average further reinforces this bullish scenario and points to the potential for testing new highs if the Federal Reserve’s decision aligns with market expectations for a rate cut.