The price of gold (XAU/USD) continued its downward trajectory early Monday during the European session. Despite this decline, the precious metal remains within close range of its peak since May 22, indicating a potential for further appreciation driven by expectations of a dovish Federal Reserve.
Investors are increasingly confident that the Federal Reserve will initiate interest rate cuts starting in September, bolstering the appeal of gold as a non-yielding asset. This sentiment has limited the US Dollar’s recovery from a three-month low, providing additional support for the price of gold denominated in USD. Geopolitical tensions following an alleged assassination attempt on former US President Donald Trump and economic concerns in China further underpin the positive outlook for XAU/USD in the near term.
Technical Analysis: Potential Retest of All-Time Highs
From a technical standpoint, Friday saw significant buying interest near the $2,390-2,388 resistance level, reinforcing strong support. Daily chart oscillators remain in positive territory without reaching overbought conditions, indicating a favorable path for the gold price upward. A dip below $2,400 could present a buying opportunity, with downside risk potentially limited.
However, sustained selling pressure could push the price toward the $2,358 area, supported by intermediate levels around $2,372-2,371, and potentially down to the 50-day Simple Moving Average near $2,350.
Conversely, overcoming last week’s high near $2,425 poses an immediate challenge, beyond which the price may target the all-time peak around $2,450 reached in May. Continued strength above this level could trigger bullish momentum, extending the recent upward movement observed over the past fortnight.
In summary, while gold prices face short-term pressures from renewed US Dollar demand, market dynamics and technical indicators suggest a resilient outlook with potential for further gains supported by Federal Reserve policy expectations and geopolitical developments.
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