Gold surged to a new all-time high following another soft Non-Farm Payroll (NFP) report, enhancing dovish sentiment towards the Federal Reserve. Expectations have shifted towards three rate cuts by the end of the year, with an 8% chance of a 50 basis point cut in September, dependent on forthcoming CPI data.

Over recent months, continued dovish positions, especially after Fed Chairman Powell’s Jackson Hole Symposium remarks, have supported the price increase. US CPI data and the FOMC meeting next week are anticipated, with gold likely to stay on an uptrend as real yields potentially fall due to anticipated Fed easing.

Technical Analysis On Gold

Technically, gold hit a new peak before pausing around the 3,600 level. Buyers may find favourable risk-to-reward setups near previous highs at 3,500, while sellers might aim for a break below this to target 3,245 next.

The daily and hourly charts indicate strong bullish momentum, supported by upward trendlines. A pullback to these trendlines could offer buying opportunities, while sellers will look for breaks lower to trigger potential corrections. Key upcoming US economic reports this week include the PPI report, CPI data, Jobless Claims, and Consumer Sentiment figures.

Given the high price of gold, we must consider the impact of last week’s soft Non-Farm Payrolls report. The report showed the US economy added just 145,000 jobs in August 2025, missing expectations and fueling the idea that the Federal Reserve will cut rates soon. This weakness has pushed gold to new all-time highs around the $3,600 level.

The market is now acting on the belief that rate cuts are coming, with a high probability of at least three cuts by the end of 2025. We are seeing the CME FedWatch Tool pricing in over a 70% chance of a 25 basis point cut at the FOMC meeting next week. This follows Fed Chair Powell’s dovish comments at the Jackson Hole symposium in late August 2025, which really kicked off this rally.

All Eyes On Upcoming CPI Data

All eyes are now on the US CPI inflation data due this Thursday. The last Core PCE inflation reading for July 2025 eased to 2.7%, and another soft inflation number would likely lock in a rate cut and could send gold even higher. A surprisingly high inflation number, however, would challenge this view and could trigger a sharp pullback.

For derivative traders, this suggests a strategy of buying call options on any dips toward the previous high of $3,500. This level should now act as strong support, offering a good risk-to-reward entry for bullish positions. Using call spreads could be a way to lower the cost of the trade, especially with volatility expected to rise.

Conversely, a clear break and hold below $3,500 would be a significant bearish signal. Traders could respond by purchasing put options or establishing put spreads, targeting a move down toward the $3,245 support zone. This trade would depend on a hawkish surprise from either the CPI data or the Fed next week.

We must be mindful of rising implied volatility ahead of these major economic events. The upcoming CPI report and FOMC meeting will make options more expensive. This environment favors strategies like vertical spreads, which can help manage costs while still allowing for directional bets.

This situation reminds us of the market pivot we saw in late 2023, when expectations of Fed rate cuts also caused a major rally in gold. Back then, markets that aggressively priced in easing were rewarded as weaker data continued to come in. We may be seeing a repeat of that pattern now in the autumn of 2025.

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