Gold prices reached an all-time high after a weaker Non-Farm Payroll (NFP) report, which increased the dovish sentiment towards the Federal Reserve. Most anticipate three rate cuts by the year’s end, with an 8% chance for a 50 basis point cut in September, depending on upcoming CPI data. In recent months, dovish talks, especially from Fed Chairman Powell during the Jackson Hole Symposium, have helped boost prices. The market is waiting for US CPI data and the FOMC meeting next week, with expectations that gold will continue to rise as real yields decline from expected Fed easing.

Technical Analysis on Gold

On the technical side, gold reached a new high but paused around the $3,600 level. Buyers may see good risk-to-reward opportunities near the previous high of $3,500, while sellers might look to push below that to target $3,245. Daily and hourly charts show strong bullish momentum with upward trend lines. A pullback to these trend lines could offer buying chances, while sellers could jump in if prices break lower for potential corrections. Key US economic reports to watch this week include PPI, CPI data, Jobless Claims, and Consumer Sentiment figures. Given the elevated price of gold, the impact of last week’s weak NFP report is significant. The report revealed that the US economy added only 145,000 jobs in August 2025, falling short of expectations and fueling speculation about imminent Federal Reserve rate cuts. This weakness has driven gold to touch $3,600. The market seems to believe rate cuts are likely, with a strong probability of at least three by the end of 2025. The CME FedWatch Tool indicates over a 70% chance of a 25 basis point cut during the upcoming FOMC meeting, following Fed Chair Powell’s dovish comments at the Jackson Hole symposium in late August 2025 that launched this rally.

All Eyes on Upcoming CPI Data

Attention is now on the US CPI inflation data set for this Thursday. The last Core PCE inflation figure for July 2025 dropped to 2.7%. Another low inflation report could solidify expectations for a rate cut, potentially pushing gold prices even higher. However, a surprisingly high inflation report could challenge this view and lead to a sharp pullback. For derivative traders, this points towards buying call options on dips to the previous high of $3,500. This level should serve as strong support and provide a favorable entry for bullish positions. Using call spreads may lower trading costs, especially with rising volatility. On the flip side, a significant break and hold below $3,500 would signal bearish trends. Traders might respond by buying put options or setting up put spreads with goals toward the $3,245 support zone, depending on any hawkish surprises from CPI data or the Fed meeting next week. It’s important to be aware of rising implied volatility before these key economic events. The upcoming CPI report and FOMC meeting are expected to increase options prices. This scenario tends to favor strategies like vertical spreads, which can help manage costs while allowing for directional trades. This situation echoes the market shift seen in late 2023. Back then, expectations of Fed rate cuts also prompted a substantial rally in gold. Markets that priced in easing aggressively were rewarded as weaker data continued to surface. We may be observing a similar trend now in the autumn of 2025. Create your live VT Markets account and start trading now.

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