Gold nears all-time high as US Dollar weakens and Fed rate cut bets grow

• Gold's rally continues, with the metal advancing for a fifth consecutive session, pressing toward the all-time high zone.
• A broadly weaker US Dollar, with the US Dollar Index (DXY) hovering near a one-month low, and September Fed cut expectations are driving demand.
• Mixed PCE inflation keeps focus on the US labor market, with upcoming JOLTS, Jobless Claims and Nonfarm Payrolls seen as key for Fed monetary policy path.

Gold (XAU/USD) kicks off the week on a stronger note, extending its advance for a fifth consecutive day to reach its highest level in more than four months, last seen on April 22. A broadly weaker US Dollar (USD) and firm expectations of a Federal Reserve (Fed) interest rate cut in September continue to bolster bullion's momentum.

At the time of writing, XAU/USD is trading around $3,470 in the European session, easing from an intraday high of $3,489 marked during Asian hours and coming just shy of the all-time high at $3,500. Mild technical selling and steady US Treasury yields are weighing on sentiment, while trading conditions remain thin with United States (US) markets closed for Labor Day.

Beyond monetary policy expectations, bullion continues to attract safe-haven demand as uncertainty mounts over US trade policy and the Fed's independence. On Friday, a federal appeals court ruled that most of US President Donald Trump's global tariffs were unlawful, saying he had overstepped his authority under the International Emergency Economic Powers Act (IEEPA). This ruling, combined with geopolitical tensions and broader investor caution, is keeping bullion well-supported near record highs.

Market movers: DXY weakens, yields steady, tariff ruling and Fed in focus

• The US Dollar Index (DXY), which measures the Greenback against a basket of six major currencies, is trading near a one-month low around 97.50, extending its recent losing streak as investors position for a dovish Fed outlook. The Greenback's decline is amplifying demand for Gold, as a cheaper US Dollar makes the metal more attractive for non-US buyers.
• US Treasury yields are stable across the curve, with the 10-year benchmark hovering around 4.23% after pausing a three-day losing streak. The 30-year yield is holding near 4.93%, while inflation-protected securities (10-year TIPS) are trading around 1.82%. In contrast, the rate-sensitive 2-year yield remains under pressure at 3.62%, holding near its lowest level since May 1, reinforcing the market's conviction of a September interest rate cut.
• A 7-4 split decision by the US Court of Appeals has cast doubt on the legality of Trump's tariffs, emphasizing that the power to impose duties rests with Congress, rather than the US president acting alone. Although the levies will remain temporarily in place under a stay until mid-October, the administration is preparing to take the case to the Supreme Court. Separately, the court hearing on Trump's bid to remove Fed Governor Lisa Cook concluded on Friday without a ruling. Judge Jia Cobb has asked Cook's legal team to submit further briefs, pushing the earliest possible decision to Tuesday.
• On Friday, data from the Bureau of Economic Analysis showed the core Personal Consumption Expenditures (PCE) Price Index rose 0.3% MoM in July, unchanged from June, while the yearly rate edged up to 2.9% from 2.8%, its highest since February. Headline PCE eased slightly to 0.2% MoM and held steady at 2.6% YoY. Despite the sticky core reading, traders continue to price in nearly a 90% probability of a 25 bps rate cut at the Fed's September 16-17 meeting, according to CME's FedWatch tool.
• While the uptick in core inflation muddies the monetary policy outlook, investors are turning their attention to the labor market, where signs of cooling hiring momentum and softer wage growth suggest a bigger risk to the economy than lingering inflation pressures. This week's releases, JOLTS Job Openings (July) on Wednesday, weekly Initial Jobless Claims on Thursday, and Friday's Nonfarm Payrolls (NFP) will be pivotal in shaping expectations for a September rate cut by the Fed.
• Beyond the labor data, the US economic calendar highlights the ISM Manufacturing PMI on Tuesday and ISM Services PMI on Thursday, while speeches from Fed officials may offer fresh monetary policy signals.

Technical analysis: XAU/USD approaches record high as bullish momentum builds

From a technical perspective, Gold remains firmly in a bullish structure after consolidating for several months beneath the all-time high of $3,500 marked on April 22. The recent breakout from the multi-month range signals renewed upside momentum, with bulls now testing the psychological barrier at $3,500.

A sustained daily close above this level would open the door to uncharted territory, potentially extending gains toward the $3,550-$3,600 zone in the short term. On the downside, initial support is aligned at $3,450, followed by $3,400. The 21-day Simple Moving Average (SMA), currently at $3,373, offers a deeper layer of protection and should act as a dynamic floor if corrective pressures intensify.

Momentum indicators reinforce the bullish bias, with the Relative Strength Index (RSI) hovering near 69, close to overbought levels, indicating strong but not yet exhausted buying pressure, while the Moving Average Convergence Divergence (MACD) maintains a firm positive crossover with the widening gap between the MACD and signal lines showing strengthening upside momentum. The increasing green histogram bars further confirm accelerating buying pressure, reinforcing the case for continued gains as long as Gold holds above near-term support.