Gold Rebounds, Breaking Key Resistance as Central Banks May Return
Gold prices are rebounding strongly in August, breaking above two key technical resistance levels and reaching around $4,440 an ounce. The scale of this move suggests that central banks or sovereign wealth funds may have been active buyers, with evidence pointing to renewed institutional demand for large bars.
The rebound follows a sharp drawdown triggered by the Iran war in late February, which sent gold prices from a January record of $5,595 an ounce to below $4,000 by June. Central banks drew down reserves during this time to support oil-strained economies, and investors sought liquidity.
Analysts point to the macro backdrop as more supportive now, with the US dollar at a two-month low making gold cheaper for holders of other currencies. Markets have also pared bets on a Federal Reserve rate hike following weaker-than-expected payrolls and softer consumer inflation data.