Gold Price Forecast: XAU/USD extends rally as US debt concerns continue to drag US Dollar

Market impact: bullish for XAU/USD, but increasingly vulnerable to a correction.

The immediate catalyst is a weaker US Dollar amid concerns that expanded Treasury buybacks may not address the underlying fiscal deficit and could instead reduce confidence in US dollar assets. That combination supports gold because XAU/USD is dollar-denominated, while fiscal uncertainty increases demand for an asset without sovereign credit exposure. FXStreet reported gold near $4,550, with the DXY around 98.73 and close to its three-month low.

The important market mechanism is not simply lower yields. Treasury yields reportedly recovered after an initial decline, yet the Dollar remained under pressure. This suggests the market is treating the issue as a confidence and fiscal-credibility problem, rather than a straightforward rate differential trade. If sustained, that could support gold alongside other non-dollar hedges and maintain upside pressure in EUR/USD, GBP/USD and potentially USD/CHF downside.

For XAU/USD, the bias is near-term bullish, but momentum appears extended. Gold is trading well above its 20-day EMA near $4,325.64, while the reported RSI of 68.39 is approaching overbought territory. The article identifies the May 29 high near $4,595.34 as the next upside reference, with the 20-day EMA acting as a key dynamic support area. These levels indicate strong trend momentum, but also raise the risk of profit-taking if the Dollar stabilizes or Treasury yields rise materially.

The medium-term outlook depends heavily on monetary-policy expectations. Markets reportedly expect the Federal Reserve to leave rates unchanged at its September meeting, while attention is shifting to Fed Chair Kevin Warsh’s scheduled Jackson Hole speech on August 27–29, 2026. Any communication that reinforces restrictive policy, reduces expectations for future easing, or supports real yields could pressure gold; conversely, dovish guidance or concern about financial conditions would reinforce the bullish precious-metals narrative.

Key risks to the bullish interpretation:

• A recovery in the DXY driven by stronger US data or hawkish Fed communication.
• A sustained rise in real and nominal Treasury yields, increasing gold’s opportunity cost.
• Evidence that Treasury operations successfully improve bond-market liquidity and restore confidence in US assets.
• Technical exhaustion near the reported resistance zone, producing a pullback despite the broader fiscal narrative.

What traders should monitor next:

DXY behavior relative to its recent low, long-duration Treasury yields, real yields, Treasury auction and buyback reception, Fed communication at Jackson Hole, and whether gold can hold its breakout without a renewed Dollar rebound. The news is supportive for XAU/USD, but follow-through requires continued Dollar weakness or further deterioration in confidence toward US fiscal and debt-market conditions.