Gold Price Prediction Today: XAU/USD Breaks Above $4,250 as Dollar Slides on Fed Accommodation

Gold extends rally to $4,275 amid fresh weakness in the US currency during early Friday trading

The precious metal continues its ascent, trading near $4,275 in Friday’s Asian session as a softer US Dollar underpins bullion prices. The latest gold price forecast reflects mounting support from monetary policy easing and deteriorating labor market signals that have caught the attention of Federal Reserve officials.

Fed Rate Cut Delivers Double Blow to Dollar Strength

The Federal Reserve’s controversial 25 basis point rate reduction on Wednesday has become a major tailwind for gold price prediction today. The decision, which saw a split vote among policymakers, lowered the benchmark interest rate to the 3.50%-3.75% range—marking the lowest level in three years. This accommodation strategy reduces the real returns available from holding US Dollar-denominated assets, making gold an increasingly attractive alternative for portfolio managers seeking value.

The implications of this split vote carry particular significance for currency markets. Rather than signaling unified commitment to further easing, the divided Fed suggests growing caution about the inflation outlook. Nonetheless, immediate market reaction favors gold and other commodities priced in greenbacks, as the lower US rates create immediate headwinds for currency valuations.

Labor Market Weakness Reinforces Safe-Haven Demand

Recent employment data has added another layer of support to the gold price forecast. Jobless claims surged by their largest weekly increase in nearly 4.5 years, according to Thursday’s Department of Labor report. This unexpected softness in the labor market contradicts the Fed’s earlier confidence about economic resilience and validates their decision to cut rates despite “somewhat elevated” inflation readings.

The weaker-than-expected jobs data has essentially validated Fed concerns about deteriorating employment trends, positioning gold as a defensive commodity during periods of economic uncertainty.

Market Pricing Suggests Extended Pause in Cuts

Despite the single rate reduction, Federal Reserve officials have signaled a likely halt to further rate cuts, citing the need to monitor labor market trends more closely. CME FedWatch tool data reveals that markets are now pricing in a 78% probability of rate holds next month—a notable shift from the 70% odds recorded just before the Wednesday announcement. This adjustment reflects market expectations that the Fed has concluded its cutting cycle, at least temporarily.

This stabilization in rate expectations could eventually limit gold’s upside potential, as the commodity typically benefits most during periods of rapid monetary easing and crisis conditions.

Ukraine Peace Framework Could Challenge Gold’s Safe-Haven Premium

One potential constraint on further gold price gains emerges from diplomatic developments. Ukrainian President Zelensky announced that Kyiv’s delegation has engaged with senior US officials regarding security arrangements for Ukraine, following presentation of a revised 20-point proposal to resolve the conflict with Russia. Any tangible progress toward peace would reduce the traditional safe-haven appeal that typically elevates gold valuations during geopolitical tensions.

The interplay between monetary accommodation and de-escalation in Ukraine will be crucial for determining the trajectory of the gold price forecast in coming weeks.