Gold Price Forecast Points to Critical Support Levels as XAU/USD Faces Mixed Drivers

The gold market has come under selling pressure recently, with XAU/USD slipping toward the $5,035 area amid a broader shift toward riskier assets. Traders repositioning into equities—with the S&P 500 pushing toward record levels—have prompted some profit-taking in the precious metals space. However, structural demand dynamics suggest the downside may prove limited in the near term.

Central Bank Demand Establishes a Price Floor for Gold

The strongest underpinning for gold prices remains consistent demand from major central banks. The People’s Bank of China (PBOC) has extended its reserve accumulation for the 15th consecutive month, with holdings climbing to 74.19 million fine troy ounces. This sustained central bank purchasing power acts as a price stabilizer, even as short-term risk sentiment ebbs and flows. With geopolitical tensions potentially easing—Iran’s leadership recently signaled openness to negotiations with Washington—traditional safe-haven demand could fluctuate, but the structural appetite from global monetary authorities keeps downside risks in check.

US Economic Data to Shape the Gold Price Forecast Ahead

Investor attention is now squarely on the week ahead, where critical US labor market and inflation reports will provide directional cues for both the Federal Reserve’s policy trajectory and the US Dollar’s strength. The employment figures carry particular weight, with markets expecting around 70,000 net jobs added and the unemployment rate holding at 4.4%. A softer-than-expected reading could weaken the US Dollar and offer support to USD-denominated commodities like gold.

Similarly, the Consumer Price Index (CPI) data due later in the week will be instrumental in shaping the gold price forecast for months to come. Should inflation readings surprise to the downside, expectations for Fed rate cuts could strengthen, pressuring the dollar and lifting precious metals valuations. Conversely, sticky inflation could prolong rate expectations, creating headwinds for gold. For traders, the gold price forecast hinges on whether economic data validates current market pricing or triggers a repricing event across asset classes.