Gold Price Forecast: XAU/USD Builds Toward Breakout as Central Banks Dominate Flow

XAU/USD Positioned for Historic Bull Continuation as Central Banks Dominate Demand

$3,322–$3,369 Support Zone Holds as Bullish Pennant Formation Builds Toward $3,578

Gold (XAU/USD) has entered a critical structural consolidation above $3,300, carving out a textbook bull pennant on the daily chart. Friday’s advance to $3,369 broke the convergence of both the 50-Day and 20-Day MAs and cleared the previous swing high of $3,366, signaling strength. Price remains pinned in the top quarter of its intraday range, implying underlying bullish control. The next technical trigger sits at $3,435, and a confirmed close above that opens the path toward $3,578, the ABCD pattern extension from the mid-May low. An even more aggressive upside exists at $3,603, representing the 127.2% Fibonacci extension from the April downswing.

With both Silver and Bitcoin breaking fresh highs this week, gold’s current consolidation reflects a delayed—but not denied—reaction. The $3,250–$3,267 zone remains a key line of defense, having held firm in late May and June. Any pullback into this zone, especially with ascending triangle support at $3,322, should be seen as an opportunity—not a warning.

Central Bank Accumulation at Record Levels Reinforces Structural Bull Thesis

The long-term rally in XAU/USD has been underpinned by aggressive central bank accumulation. Since Q3 2022, gold has more than doubled, surpassing $3,300/oz, fueled by central banks buying over 1,000 tonnes annually—a dramatic increase from the 400–500 tonne average in the prior decade. The World Gold Council (WGC) confirms this shift is not cyclical but structural, with 95% of central banks surveyed expecting reserves to increase over the next 12 months. Notably, none anticipate a decrease.

This trend is politically anchored. Amid wars in Ukraine and Gaza, erratic U.S. tariff policy under Trump, and financial sanctions crippling nations like Russia and Iran, gold’s value as a sanctions-proof reserve has risen dramatically. As fiat debasement and dollar weaponization expand, gold has become the go-to hedge for monetary sovereignty.

Retail Jewellery Demand Collapses Under Price Shock, Confirms Institutional Dominance

Retail markets tell the other side of the demand story. In Pakistan, gold prices have surged 2.5x in three years, forcing consumers to rent imitation jewellery for weddings—an unthinkable practice historically. The WGC confirms that jewellery demand has collapsed sharply amid record-high prices. This signals a decisive transfer of gold’s price control from retail to sovereign and institutional hands. It’s no longer a trinket—it’s a macroeconomic weapon.

Emerging Economies Drive Sovereign Gold Buildup, Dollar Exposure in Decline

Among the most aggressive buyers are China, Türkiye, Poland, and India. China, the largest buyer, is diversifying away from U.S. dollar exposure—a strategy reinforced by Russia’s reserve asset freeze. Middle Eastern states such as Qatar, UAE, and Oman have also joined the shift, adding hundreds of tonnes since 2022. These countries are no longer accumulating gold for currency pegs—they are shielding national wealth from U.S. financial dominance. Poland directly cited geopolitical resilience and war proximity as drivers of its surge in bullion holdings.

This is not merely reserve diversification—it’s a declaration of independence. Central banks are turning gold into a sovereignty anchor, bypassing SWIFT exposure and creating settlement buffers for sanctions-agnostic trade.

Inflation Hedge Narrative Returns as Fiat Confidence Wanes

After decades of dollar supremacy, the monetary pendulum is swinging. Since 2020, pandemic-driven inflation and geopolitical instability have reignited confidence in gold’s historical role. Central banks are reacting to fiat dilution and currency politicization by turning to gold as the ultimate hard asset—immune to default, dilution, or geopolitical blackmail.

This is evident in XAU/USD’s steady grind upward despite resistance in other asset classes. With inflation still eating into purchasing power and real yields failing to offset risk, gold remains the singular unlevered safe haven.

Bullish Continuation or Deeper Digestion? $3,435–$3,451 Levels Hold the Answer

Technically, the structure remains bullish as long as price holds above $3,250. An ascending triangle suggests buildup toward another leg up. Bulls have successfully defended each pullback since the $3,149–$3,167 retest. The 20-Day MA and 50-Day MA are now both rising and intersecting with trendline support, increasing odds of a momentum continuation breakout.

A clean break above $3,435, then $3,451, would validate the pennant and potentially accelerate gains toward $3,578, then $3,603. Failure to breach those levels doesn’t collapse the setup but may trigger another support test around $3,250 or $3,200. A sustained breakdown below $3,149 would mark a trend reversal.

XAU/USD Verdict: BULLISH CONTINUATION – BUY ON DIPS

With sovereign accumulation rising, retail competition fading, and technicals aligning for a continuation breakout, the broader thesis for XAU/USD remains decisively bullish. Any retrace into the $3,250–$3,267 region is a strong accumulation zone. A breakout above $3,451 clears the way for $3,578, with $3,603 as the structural target.

Verdict: BUY ON DIPS. Stay long while $3,149 holds. Prepare for breakout above $3,451 toward $3,578 and $3,603. Central banks, not retail, are in charge. This is a strategic regime shift—not a speculative rally.

That's TradingNEWS