- Gold price trades close to record highs near $2,500 early Monday.
- The US Dollar sees fresh selling amid risk appetite, sluggish US Treasury bond yields.
- Dovish Fed bets heighten ahead of Chair Jerome Powell’s speech and FOMC Minutes.
- Gold price charted a symmetrical triangle breakout on Friday, with upside bias still intact.
Gold price is battling $2,500 early Monday, having refreshed all-time highs at $2,510. Gold traders prefer to take profits off the table, repositioning before the key US Federal Reserve (Fed) Minutes of the July meeting and Chairman Jereme Powell’s speech later this week.
Gold price eases, but bullish bias still intact
Gold price witnessed a steep rise during the second half of Friday’s trading, gaining as much as 3% on the week.
The Gold price rally was mainly backed by heightened expectations of a Fed rate cut in September, as traders turned their attention to the upcoming week’s Jackson Hole Symposium, where Fed Chair Jerome Powell could throw fresh hints on additional easing beyond September.
Dovish comments from Chicago Fed President Austan Goolsbee warned that officials should be wary of keeping the restrictive policy in place longer than necessary.
In light of the dovish Fed expectations, Gold price rallied to a fresh record high of $2,509 on Friday, further supported by rife tensions in the Middle East. An imminent Iranian attack on Israel loomed, as Hamas mulled over ceasefire talks with the latter.
In Monday’s trading so far, Gold buyers appear to have taken a breather, consolidating Friday’s upsurge while finding fresh haven demand after Hamas rejected the latest US proposal for Gaza hostage and ceasefire deal on Sunday. Iran-backed militant group, Hamas, blamed Israeli Prime Minister Benjamin Netanyahu for putting up new obstacles in the talks, as cited by The Times of Israel.
Amidst renewed geopolitical tensions, the Gold price retracement remains limited, also as technical indicators on the daily time frame indicate more upside is likely in the near term.
Gold price technical analysis: Daily chart
Gold price closed Friday above the upper boundary of a symmetrical triangle formation, then at $2,470, confirming an upside break of the symmetrical triangle formation.
The 14-day Relative Strength Index (RSI) is easing off higher levels but remains well above the 50 level, suggesting that Gold price remains a ‘buy-the-dip’ trade.
If the new record high of $2,510 is reclaimed on a sustained basis, the next relevant topside target is seen at the $2,550 level. Acceptance above the latter could challenge the $2,600 round level en route to the triangle target, measured at $2,660.
In case the Gold price pullback gathers traction, the immediate support is seen around the previous $2,480 static supply zone, below which the triangle resistance-turned-support, now at $2,467 will be tested.
Further south, the $2,450 support will come into play.
(This story was corrected on August 19 at 06:15 GMT to say that the $2,480 static supply zone is a support, not a resistance.)
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD stays near 1.0400 in thin holiday trading
EUR/USD trades with mild losses near 1.0400 on Tuesday. The expectation that the US Federal Reserve will deliver fewer rate cuts in 2025 provides some support for the US Dollar. Trading volumes are likely to remain low heading into the Christmas break.
GBP/USD struggles to find direction, holds steady near 1.2550
GBP/USD consolidates in a range at around 1.2550 on Tuesday after closing in negative territory on Monday. The US Dollar preserves its strength and makes it difficult for the pair to gain traction as trading conditions thin out on Christmas Eve.
Gold holds above $2,600, bulls non-committed on hawkish Fed outlook
Gold trades in a narrow channel above $2,600 on Tuesday, albeit lacking strong follow-through buying. Geopolitical tensions and trade war fears lend support to the safe-haven XAU/USD, while the Fed’s hawkish shift acts as a tailwind for the USD and caps the precious metal.
IRS says crypto staking should be taxed in response to lawsuit
In a filing on Monday, the US International Revenue Service stated that the rewards gotten from staking cryptocurrencies should be taxed, responding to a lawsuit from couple Joshua and Jessica Jarrett.
2025 outlook: What is next for developed economies and currencies?
As the door closes in 2024, and while the year feels like it has passed in the blink of an eye, a lot has happened. If I had to summarise it all in four words, it would be: ‘a year of surprises’.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.