Gold Consolidates Breakout Amid Dovish Fed and Central Bank Demand

Gold prices consolidated their recent breakout after breaking higher last week, and the bullish case for the precious metal continues to build.

The break above $4,200 was driven by a series of supportive developments, including the dovish Federal Reserve meeting in July, which reduced the likelihood of rate hikes and weakened the US dollar. The US-Japan intervention episode also added pressure on the dollar, while central banks' continued demand for gold remains broadly supportive.

The metal's rally has been impressive, especially given that it occurred despite elevated US real yields, which historically may have been expected to weigh on prices. However, the RSI and MACD oscillators are favoring a continuation of the bullish move, indicating that buying dips is the preferred strategy right now.

The key level to watch overhead remains $4,367, which was a low set in late May and has since become resistance. A breakout above this level could potentially target the 100-day and 200-day moving averages at $4,495.