Gold (XAU/USD) Eyes Weekly Close Above $3400/oz on Renewed Haven Demand and DXY Weakness

[Ben Graham]

Gold prices have continued to advance this week on a combination of a weak US Dollar and renewed haven demand, setting the stage for a potential retest of all-time-highs at $3500/oz next week.

The return of haven demand may be attributed to the ongoing Russia/Ukraine discussions, Fed independence concerns (which are also having an effect on the Dollar) and a potential surge in tension between Iran, the US and the E3 (Germany, France and England).

Rising Geopolitical Risks

Just as it seemed market participants may be getting a prolonged reprieve from a heightened geopolitical risk environment which has continued throughout 2025, it appears these hopes are faltering.

The Russia-Ukraine discussions are from being concluded with a potential meeting between Russian leader Vladimir Putin and his Ukrainian counterpart Zelensky facing significant challenges.

On Friday, Russia stated that Western plans to give Ukraine security guarantees would increase the chance of a conflict between Russia and the West. Russia believes these guarantees would turn Ukraine into a "strategic provocateur" right on its border.

Ukraine's European allies are trying to create a set of promises to protect Kyiv from a future Russian attack. These guarantees could be part of a future peace agreement.

Ukrainian President Volodymyr Zelenskiy said on Thursday that he expects the details of these security guarantees to be ready as soon as next week.

A spokeswoman for the Russian Foreign Ministry, Maria Zakharova, said that any security guarantees must also consider Russia's security interests.

These comments will do little to quell the concerns that a deal is from being reached at this stage.

Geopolitical risk is also facing another concern as tensions between Iran and Western countries have returned to the fore.

France, Britain, and Germany have started the process to bring back all of the United Nations' sanctions on Iran. They are doing this because they say Iran has deliberately broken the rules of the 2015 nuclear deal, which had previously lifted these sanctions.

The U.N. sanctions that were in place before the deal included a ban on conventional weapons, limits on developing ballistic missiles, and a freeze on assets and travel bans for certain individuals.

The three European countries, also known as the E3, had offered Iran a chance to delay these new sanctions. The offer was made during talks in July and depended on Iran meeting three conditions: restarting talks with the United States about its nuclear program, letting U.N. inspectors into its nuclear sites, and explaining what happened to the more than 400 kilograms of highly enriched uranium that the U.N. says it has.

Iran could leave the NPT as a result with growing calls in Iran for the leadership to halt negotiations they see as one-sided.

This could have further implications down the line and raise the risk of another war moving forward.

Fed Independence and the US Dollar

President Trump's decision to fire Fed Governor Lisa Cook is seen as a move to make the Federal Reserve more political, which would normally weaken the dollar. However, the dollar's value hasn't changed much, likely for two reasons.

First, Cook is fighting the firing, and it will probably be decided in court. Second, her leaving won't have a big effect on the Fed's decisions in the near future because Chairman Powell is still in charge. As long as Powell is there, the market expects the Fed's policy to be based on economic data, and there aren't enough members who want to lower interest rates faster or more aggressively to change that.

The US Dollar has not changed much since the announcement but chatter continues to grow. The US Dollar remains close to YTD lows and has fallen significantly since August 1 with the US Dollar index on course to finish the month down around 2%.

This coupled with rate cut expectations at the Feds September meeting hovering around the 88% mark post the PCE release today has helped Gold prices advance.

Source: LSEG

The question moving into next week is whether Gold will finally retest the all-time high around the $3500/oz mark?

Looking Ahead

Markets are entering the labor day long weekend with US markets closed on Monday. However, the rest of the week is shaping up to be a busy one.

ISM services and NFP jobs data will be the key drivers next week for the US dollar. Further weakness in the labor market and continued US Dollar weakness could set the stage for fresh all-time highs for Gold prices and are definitely worth watching heading into next week.

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Technical Analysis - Gold (XAU/USD)

From a technical standpoint, a weekly candle close for gold above the $3400 may be crucial, as it would be the first time this happens since early June.

On that occasion though the following week saw Gold prices decline by about 1.8% the following week and failed to test or breach the $3500/oz handle.

Could history repeat itself? Quite possible although on this occasion i see a lot of the macroeconomic themes supporting further upside for the precious metal. Time will tell.

Gold (XAU/USD) Weekly Chart, August 29, 2025

Source: TradingView (click to enlarge)

Dropping down to a four-hour chart, and a candle close above the immediate resistance at 3431.66 may be key if momentum is to continue.

A pullback may find support at yesterday's swing high around the 3418 handle before the 3400 mark comes back into focus.

Beyond the 3431 handle, resistance may be found at 3450 and 3475 respectively before the $3500 handle comes back into focus.

Gold (XAU/USD) Four-Hour Chart, August 29, 2025

Source: TradingView (click to enlarge)

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