Gold extended its advance into a third consecutive week, supported by a softer U.S. dollar and diminishing expectations for Federal Reserve rate hikes. The metal has climbed despite a backdrop of rising Treasury yields, which typically erode non-yielding assets like bullion. Analysts attribute the yield increase to mounting concerns over unsustainable U.S. debt levels and the rising cost of servicing that debt, rather than expectations of tighter monetary policy.
This week’s schedule is packed with catalysts that could sway both gold and broader financial markets. Investors will monitor U.S. fiscal developments, including fresh sanctions on Iran and Treasury Secretary Scott Bessent’s anticipated announcement of a new sanctions package later on Monday. The measures may reignite trade tensions with China, the largest buyer of Iranian energy exports, potentially pressuring the dollar if tensions escalate. Additionally, midweek inflation data and a keynote speech by former Fed governor Kevin Warsh at the Jackson Hole symposium on Friday could further influence market sentiment.
Warsh’s remarks are unlikely to offer immediate clarity on the Fed’s September policy path, but his emphasis on inflation-fighting credibility may sway bond yields and the dollar. If yields fail to reverse course, the dollar’s recent weakness could persist, providing continued support for gold. The metal’s technical outlook remains constructive, with several prior resistance levels now serving as potential support zones. Key support is seen between $4,500 and $4,541, where the 200-day moving average converges with a prior resistance area. Below that, the next notable floor lies between $4,400 and $4,450, followed by a critical level at $4,324, which marked the most recent low before the rally.
On the upside, resistance is first tested at $4,655, with subsequent barriers at $4,700, $4,800, the 61.8% Fibonacci retracement at $4,965, and the psychological level of $5,000. The analysis suggests gold’s immediate trajectory hinges on whether these resistance levels hold or give way, with a break above $4,655 potentially opening the path toward $4,800 and beyond.
The dollar remains near recent lows in a broader pro-risk, soft-dollar environment. However, the so-called ‘debasement’ trade could intensify if fiscal credibility concerns deepen or trade policy shifts further. The balance between U.S. fiscal consolidation efforts, trade relations, and the Fed’s inflation stance will be pivotal in determining whether the dollar’s recent declines persist or reverse, thereby shaping gold’s next leg.
