Gold (XAUUSD) Price Forecast: Breakout Above $3,310.48 Could Target $3,435.06 and $3,500.20

Gold Eyes Breakout as Dollar Slips and Deficit Concerns Mount

Gold prices are trading higher on Wednesday, pressing against a key resistance level at $3,310.48, fueled by broad U.S. dollar weakness and growing concern over the U.S. fiscal outlook. The yellow metal is now at its highest in over a week, attracting safe-haven inflows amid political friction in Washington and surging bond yields.

At 11:38 GMT, XAU/USD is trading $3308.96, up $19.12 or +0.58%.

Dollar Slides as Moody’s Downgrade Shakes Confidence

The U.S. dollar index (.DXY) slipped to a two-week low following Moody’s downgrade of the U.S. government’s credit rating last Friday. The downgrade cited rising fiscal risk and projected deficit expansion under President Trump’s proposed tax cuts. UBS analysts noted that the downgrade triggered a fresh round of dollar selling, supporting gold by making it more attractive to foreign buyers.

In FX markets, the dollar weakened across the board. It fell to 144.095 yen and dropped 0.7% against the Swiss franc. Traders are now watching U.S.-Japan discussions, which may touch on currency management and volatility. With Treasury Secretary Scott Bessent expected to meet his Japanese counterpart this week, any signal favoring a weaker dollar could give gold bulls more fuel.

Bond Market Roiled by Fiscal Fears

Long-end Treasury yields jumped on Wednesday, as the 30-year yield topped 5% and the 10-year yield hit 4.5%, spurred by expectations that the Trump administration’s tax bill could deepen the deficit by up to $5 trillion. According to Deutsche Bank, final outcomes on the tax bill will significantly shape near-term deficit projections.

Bridgewater’s Ray Dalio added to the pessimism, warning that the real risk is not default, but inflation triggered by the Federal Reserve potentially printing money to manage debt service. This sentiment, echoed in the bond market, is driving capital into gold as investors seek a hedge against monetary debasement.

Gold Technicals Hint at Breakout Potential

Technically, gold is threatening to clear the $3,310.48 pivot. A confirmed breakout would open the path toward resistance at $3,435.06 and potentially the all-time high near $3,500.20. On the downside, support levels are seen at $3277.91, $3,228.38, and more firmly at the 50-day moving average of $3,184.80.

Gold Prices Forecast: Bullish Bias Strengthens on Dollar Weakness and Fiscal Concerns

The weakening dollar, soaring bond yields, and deepening fiscal risks continue to underpin gold. With political uncertainty in Washington and no near-term resolution on fiscal policy, investor appetite for safe-haven assets remains firm. Unless yields reverse sharply or the dollar stages a surprise recovery, the technical and fundamental backdrop points to further upside. Gold remains in a bullish posture, with a confirmed breakout above $3,310.48 likely accelerating momentum toward the $3,435–$3,500 range.

More Information in our Economic Calendar.