Gold Surges to Record Highs Amid Economic Uncertainty. Forecast as of 23.07.2025
Gold’s consolidation within the range of $3,250–$3,400 per ounce cannot last forever. As is always the case, markets are shifting from tranquility to turbulence, then turmoil is giving way to stability. Will the precious metal be able to resume its upward trend? Let’s discuss this topic and make a trading plan for the XAUUSD.
The article covers the following subjects:
Major Takeaways
- The US administration’s criticism of the Fed is putting pressure on the US dollar.
- Trump calls for a 3 pp cut in interest rates to 1.5%.
- The derivatives market does not believe in July’s monetary expansion.
- Long trades can be considered if the XAUUSD surges above $3,445.
Weekly Fundamental Forecast for Gold
After a period of consolidation, gold has demonstrated a resurgence in strength, breaking out of its sideways range. For an extended period, XAUUSD quotes persisted within a trading range of $3,250–$3,400. Only when the US administration mounted pressure on the Fed and FOMC officials offered dovish remarks did the precious metal demonstrate its potential for growth.
According to TD Securities, macro hedge funds have increased positions on gold. The recent developments in trade policy, including the ongoing trade wars, the anticipation of a significant decrease in federal funds rates, a stagflationary environment, and a decline in confidence in the Fed, have led to a renewed possibility of an upward trend in gold prices.
USD Index and Gold Performance
Source: Trading Economics.
Standard Chartered has outlined two key factors driving the sustained surge in the XAUUSD: a surge in holdings of gold ETFs and a weakening of the US dollar. Specialized exchange-traded fund reserves are increasing, but their size still lags behind the October 2020 peak by approximately 300 tons. Against this backdrop, gold prices have significant room to rise further.
Eroding confidence in the Federal Reserve and the US dollar is creating a tailwind for gold. Donald Trump has urged the central bank to cut interest rates by 3 percentage points to 1.5%. Although Scott Bessent did not explicitly state that Jerome Powell should resign, he did suggest it indirectly. The Treasury Secretary has noted that the Fed’s mandate is encroaching on areas that go beyond its core mission, and the Fed divisions should be scrutinized to ensure their effectiveness.
Meanwhile, Christopher Waller’s remarks provided a supportive backdrop for gold prices. The FOMC official believes that the central bank should not wait for the labor market to cool significantly. In light of these developments, a reduction in rates is anticipated in July. On paper, the Fed’s rapid and aggressive monetary expansion should have harmed the US dollar. The derivatives market, however, has a different perspective, as it does not believe that Jerome Powell will blindly follow the president’s directives. The market does not expect the Fed to resume the cycle in July. It has adjusted the forecasts for the scale of monetary policy easing in 2025, lowering it from 65 basis points at the beginning of the month to 45 basis points.
Gold Price and Federal Funds Rate Trajectory
Source: Trading Economics.
Gold prices are linked to the USD index. The US dollar may still regain its position after a more than 10% collapse since the beginning of the year. Between January and July, the global economy expanded due to a significant increase in US imports, putting pressure on the US dollar as a safe-haven currency. Between August and December, US tariffs may hamper global GDP and allow the greenback to become the primary defensive currency on Forex again.
Weekly Trading Plan for Gold
Gold has achieved the first of two targets for long trades at $3,425 and $3,445 per ounce. The second target level is critical for the gold market. If the precious metal manages to break through this level, long positions can be considered. On the contrary, a rebound will increase the risks of a reversal and correction in the XAUUSD.
This forecast is based on the analysis of fundamental factors, including official statements from financial institutions and regulators, various geopolitical and economic developments, and statistical data. Historical market data are also considered.
Price chart of XAUUSD in real time mode
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