Gold Soars to New High as USD Weakness Continues
Gold has reached a new high since early June, reaching $4,544 during the Asian session on Friday. The metal's price is being supported by the weakness of the US Dollar, which has been depressed near its lowest level in over three months due to fading bets for an immediate interest rate hike by the Federal Reserve.
The latest US inflation data released last week pointed to signs of cooling price pressures, leading traders to scale back their expectations for a Fed rate hike. However, investors remain concerned about inflation risks stemming from higher oil prices, which have been bolstered by the US-Iran standoff over the Strait of Hormuz and Yemen's Iran-backed Houthi militant group's declaration of a maritime blockade on Saudi shipping.
Meanwhile, the Minutes from the July 28-29 FOMC meeting revealed that Fed officials indicated the need to raise interest rates soon unless there was more progress on bringing down inflation. The CME Group's FedWatch Tool indicates that investors are still pricing in around a 68% chance that the US central bank will raise borrowing costs at least once by year-end.
The technical setup for gold suggests a constructive near-term tone, with bulls awaiting a move beyond the 61.8% Fibonacci retracement level of the April-June decline before placing fresh bets. The Moving Average Convergence Divergence (MACD) indicator remains positive, reinforcing the upward bias.