Gold (XAU/USD) trades practically flat for the second consecutive day on Friday, with the rejection from three-month highs near $4,700 hit earlier in the week contained at a previous resistance area, just below $4,600. Market volatility remains subdued on Friday, with investors focusing on Federal Reserve Chairman Kevin Warsh’s speech at the Jackson Hole Symposium, due later in the day.
Technical Analysis
XAU/USD trades at $4,599 with the broader bullish stance in play as spot price holds well above the 200-day Simple Moving Average (SMA), now around $4,525. Momentum indicators in the daily chart endorse the bullish view, with the Relative Strength Index (RSI) at 66.48 after pulling back from overbought extremes, and the Moving Average Convergence Divergence (MACD) holding within positive territory.
Bears remain contained above late-May highs in the $4,590 area so far, closing the path to the mentioned 200-day SMA at $4,527. Below there, the next downside target would be the August 13 high and August 20 low, at the $4,450 area.
Upside attempts remain capped ahead of the $4,700 level (Tuesday's high), ahead of the May 12 high at $4,773 and April's peak, near $4,900.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Fundamental Analysis
Investors expect Warsh to overcome his distaste for forward guidance and show some hints about the central bank’s near-term policy plans to tame price pressures, amid calls for interest rate hikes from board members.
On Thursday, Kansas Fed President Jeffrey Schmidt said on CNBC that inflation is “still sticky and we've got to continue to find ways to break through", Later on the day, Cleveland Fed President Beth Hammack reiterated that it is “time to act” to bring inflation back to target.
XAU/USD Forecast Poll
1 Week
- 67%
- Bullish
- 0%
- Bearish
- 33%
- Sideways
1 Month
- 14%
- Bullish
- 57%
- Bearish
- 29%
- Sideways
1 Quarter
- 29%
- Bullish
- 43%
- Bearish
- 28%
- Sideways
Gold (XAU/USD)
In the Forex market, Gold functions as a currency. The particularity of Gold is that it is traded against the United States Dollar (USD), with the internationally accepted code for gold being XAU.
Known as a safe-haven asset, Gold is expected to appreciate in periods of market volatility and economic uncertainty. 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. The United States is the country that holds the biggest resources of Gold in the world.
The XAU/USD pair tells the trader how many US Dollars are needed to purchase one troy ounce of Gold.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold prices escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher borrowing costs usually weigh on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars. A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Organizations that influence XAU/USD
- WGC (World Gold Council) is the market development organization for the Gold industry. Its aim is to stimulate and sustain demand for the precious metal.
- LBMA (London Bullion Market Association) is an organization whose members participate in this wholesale over-the-counter market for trading Gold and Silver. It is loosely overseen by the Bank of England. Most LBMA members are major international banks, bullion dealers, and refiners.
- COMEX (Commodity Exchange) is the primary market for trading metals. The COMEX merged with the New York Mercantile Exchange (NYMEX) in 1994 and joined the CME Group in 2008.
- CGSE (Chinese Gold and Silver Exchange Society) is an organization of Gold trading firms in Hong Kong that are participants of the Chinese Gold and Silver Exchange, the first exchange in Hong Kong.
- Central banks like the Federal Reserve (Fed), the European Central Bank (ECB) or the People's Bank of China (PBoC) significantly influence Gold prices through their monetary policies.
People that influence XAU/USD
- Neal Froneman, the World Gold Council's Chairman.
- Scott Bessent, the US Treasury Secretary.
- Xi Jinping, President of the People's Republic of China.
- The London Bullion Market Association members.
Circumstances that influence XAU/USD
The main variables traders should monitor to understand Gold's position are:
- Demand and supply: The balance between global Gold demand and its availability impacts its price.
- Economic uncertainty and currency devaluation: Gold is widely known as a safe-haven asset for investors in periods of economic uncertainty or when a currency faces devaluation.
- Practical applications: The use of Gold in technology innovations, jewelry manufacturing and other industrial applications.
Assets that influence XAU/USD
- Currencies: The US Dollar (USD) and the Euro (EUR) are the primary currencies influencing Gold prices. Other important currency pairs include EUR/USD, GBP/USD, USD/JPY, AUD/USD, USD/CHF, NZD/USD, and USD/CAD.
- Commodities: Silver and Gold are the most important precious metal commodities.
- Bonds: Influential fixed-income securities include the German Bund (a federal government-issued bond) and the US Treasury Note (T-Note).
- Indices: Key indices related to Gold and mining include the HUI (NYSE Arca Gold BUGS), the XAU (Philadelphia Gold and Silver Index) and the GDM (NYSE Arca Gold Miners Index).
- Exchanges: The most important stock exchanges for Gold are the New York Mercantile Exchange (COMEX), the Chicago Board of Trade, the Euronext/LIFFE, the London Bullion Market, the Tokyo Commodity Exchange, the Bolsa der Mercadorias e Futuros and the Korea Futures Exchange.