Gold Extends Rally to Record Highs on Debt Fears, Dovish Fed Outlook

Key Takeaways:

*Gold broke above $3,500/oz, fueled by safe-haven demand amid global bond selloffs and rising fiscal sustainability concerns.

*Softer U.S. labor data reinforced expectations of a September Fed rate cut, weakening the dollar and boosting gold’s appeal.

*Fiscal worries and monetary easing keep upside risks intact, with U.S. payrolls data seen as the next key catalyst.

Market Summary:

Gold climbed to unprecedented levels this week, breaching the $3,500 per ounce mark as intensifying safe-haven demand and shifting interest rate expectations propelled the metal deeper into record territory. The rally was fueled by a sharp selloff in global sovereign bond markets, where yields on long-term government debt in the U.K., France, and Japan surged to multi-year highs, reflecting mounting investor anxiety over fiscal sustainability and soaring public debt levels.

Parliamentary debates across major economies highlighting strained government budgets have further amplified concerns, driving capital into non-yielding assets like gold as a store of value amid financial uncertainty.

Concurrently, expectations for Federal Reserve policy are tilting increasingly dovish. Markets are now pricing in a high probability of the Fed initiating its first rate cut of 2025 at the upcoming September meeting—a sentiment reinforced by recent softer U.S. labor market data. This shift has pressured the U.S. dollar, enhancing the appeal of dollar-denominated gold for international investors.

The confluence of deteriorating sovereign credit sentiment, anticipations of monetary easing, and broad-based risk aversion has cemented gold’s role as a preferred safe haven. Should ongoing fiscal concerns persist and central banks maintain an accommodative stance, further gains remain well-supported.

Market participants now await key U.S. employment data for additional confirmation of the Fed’s policy trajectory. A soft print could extend gold’s record run, while stronger figures may prompt a short-term consolidation.

Technical Analysis 

GOLD, H4: 

Gold extended its rally this week, advancing more than 3% to reach a fresh all-time high of $3,578.50, as sustained safe-haven demand and dovish shifts in global monetary policy continued to fuel inflows into the metal. The precious metal briefly underwent a minor technical retracement but found strong support near near-term liquidity zones, promptly rebounding to reaffirm its underlying bullish structure.

Despite this robust price performance, momentum indicators are flashing signs of potential near-term fatigue. The Relative Strength Index has retreated from overbought territory, suggesting that the pace of upward movement may be slowing. Meanwhile, the Moving Average Convergence Divergence has generated a bearish crossover—often referred to as a “death cross”—at elevated levels, indicating that near-term momentum may be diverging negatively from price.

Resistance level: 3590.50, 3655.00

Support level:3510.00, 3430.00