Technical Outlook: Gold Breaks Higher as Dollar Weakens—How Far Can It Go?

Technical Outlook: Gold Breaks Higher as Dollar Weakens—How Far Can It Go?

For reference, check out my previous forecasts:

https://acy.com/en/market-news/market-analysis/gold-price-2025-3000-tariff-wars-impact-j-o-03132025-115508/

https://acy.com/en/market-news/market-analysis/dollar-weakens-gold-prices-record-highs-j-o-110116/

Gold Rush: $3000 Breakout, New All-Time High Level, What’s Next?

Gold has been on a strong rally, fueled by a mix of economic uncertainty, inflation concerns, and shifting market expectations. As investors weigh global risks and monetary policies, gold remains a preferred asset, offering protection against currency devaluation and market turbulence.

With softening economic data and speculation of a weaker dollar environment, gold’s appeal grows, especially as real yields decline. Historically, gold thrives when interest rates stabilize or drop, making it a go-to asset during times of market instability and inflation fears.

Daily

With global turmoil, Gold broke out of the $3k level and now is currently going steady to the upside as it threads on All-Time High Levels.

4-Hour

4-Hour trend is still intact for further upside with potential targets at 3022 - 3039 level upto extreme levels at $3100 level.

1-Hour

Potential Scenarios:

1. Breakout of the range in 1-Hour Timeframe could further extend Gold to new highs.
2. Breakdown of the range could send Gold on a correction to regain steam for upside move.

Catalyst on Gold

As Gold is paired with USD, a priced-in pause for the Fed rate could further weaken dollar and push Gold to the upside.

Gold and interest rates have an inverse relationship—when rates rise, gold tends to weaken, and when rates fall (or pause), gold often rallies. Here’s why:

1. Higher Interest Rates → Bearish for Gold

• Stronger USD: Rising rates make the dollar more attractive, increasing its value and making gold (which is priced in USD) more expensive for international buyers.
• Higher Bond Yields: Investors prefer interest-bearing assets like bonds over non-yielding gold, reducing demand.
• Lower Inflation Expectations: Tighter monetary conditions lower inflation risks, decreasing gold’s appeal as an inflation hedge.

2. Lower or Pausing Interest Rates → Bullish for Gold

• Weaker USD: A softer dollar makes gold more affordable globally, boosting demand.
• Lower Bond Yields: With less attractive fixed-income returns, investors shift toward gold as a safe-haven asset.
• Higher Inflation Risks: If inflation remains persistent while interest rates decline, gold strengthens as a hedge.

3. Market Expectations Matter

• Gold often moves ahead of actual rate decisions, reacting to market sentiment on future policy shifts.
• If investors anticipate lower rates, gold may rise even before an actual rate cut.

Gold thrives in low-rate, high-uncertainty environments and weakens when rates rise and the USD strengthens.

Other Key Catalysts That Could Push Gold to New Highs

4. Inflation & Stagflation Risks

• Persistent inflation increases gold’s appeal as an inflation hedge.
• Stagflation (high inflation + slow growth) often drives investors into safe-haven assets like gold.

5. Geopolitical Uncertainty & Economic Risks

• Wars, trade tensions, or financial crises push investors toward safe havens.
• Increased central bank gold purchases (especially by emerging economies) add to demand.

6. Technical Breakouts & Market Sentiment

• If gold breaks key resistance levels and stays above it (e.g., $3,000+), momentum traders and institutions could fuel further buying.

This content may have been written by a third party. ACY makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplies by any third-party. This content is information only, and does not constitute financial, investment or other advice on which you can rely.