Gold Powers Higher as US Fiscal Fears Fuel Rush Into Bullion

Traders' Opinions

Summary:

Gold pushes toward $4,644 as the Treasury’s bond-market intervention fuels Dollar and fiscal concerns. Elevated yields could trigger temporary pullbacks, but the broader fundamental picture continues to favor buyers.

BUY XAUUSD

EXP

TRADING

4660.77

Entry Price

4890.00

4500.00

4651.26 +48.29 +1.05%

0.0

Pips

Flat

4500.00

Exit Price

4660.77

Entry Price

4890.00

Gold’s rally is showing little sign of losing momentum at the start of the week, with XAU/USD pushing toward $4,644 on Monday, extending the powerful move that developed after the US Treasury stepped into the long-end of the bond market last week.

What began as a reaction to falling Treasury yields has increasingly developed into a broader anti-Dollar and fiscal-risk trade. The Treasury’s decision to expand buybacks of longer-dated government debt sent the Greenback sharply lower and raised fresh questions over how far US authorities may be willing to go to contain borrowing costs as federal debt continues to climb.

That backdrop has played directly into Gold’s hands. Investors are not simply responding to a weaker Dollar; they are also looking at the metal as protection against growing concerns over US debt sustainability and the long-term purchasing power of the currency. OCBC has similarly highlighted the return of the Dollar-debasement theme, suggesting that recent Treasury actions have encouraged investors to reconsider exposure to US assets.

There are still reasons to expect some volatility. The 30-year Treasury yield remains elevated near 5.24%, while the Dollar has recovered modestly toward 98.98. After such a strong run, those conditions could produce periods of consolidation or profit-taking without necessarily changing the broader direction.

The next test comes from US PCE inflation on Wednesday, followed by Fed Chair Kevin Warsh’s appearance at Jackson Hole on Friday. With markets assigning only around a 38% probability to a September rate increase, another soft inflation reading could reinforce expectations that the Fed has little urgency to tighten again and potentially provide another tailwind for bullion.

Middle East tensions are also keeping an underlying risk premium in the market. Washington is preparing another round of sanctions against Iran, while continued restrictions around the Strait of Hormuz leave energy markets vulnerable to renewed supply disruptions.

Gold is increasingly trading on something larger than the normal day-to-day relationship with interest rates. Concerns over the Dollar, US government finances and geopolitical uncertainty are combining to strengthen the case for holding bullion. The rally may not continue in a straight line, but unless those underlying themes begin to reverse, corrective dips are likely to continue attracting buyers.

Technical Analysis

Gold’s 4-hour chart continues to favour the upside, with the latest rally confirming a significant improvement in market structure. After establishing a major base around the $3,950–$4,000 region, XAU/USD has developed a clear sequence of higher highs and higher lows, with buyers progressively reclaiming several former resistance zones. The latest acceleration has carried price into the $4,640–$4,670 area, which represents an important historical supply zone and is now the immediate technical hurdle.

The strength of the move into this region suggests bullish momentum remains intact, although the near-vertical advance also increases the possibility of a short-term pullback or consolidation. A retracement toward $4,620–$4,640, followed by a successful defence of the breakout area, would strengthen the bullish case by confirming former resistance as new support. As long as price remains above this zone, the current weakness should be viewed primarily as a potential retest rather than evidence of a broader reversal.

A sustained break above $4,670 would provide the next confirmation that buyers remain firmly in control. Beyond there, relatively limited visible resistance leaves room for an extension toward $4,800, before attention shifts to the major supply zone around $4,880–$4,900. This is the most important upside objective visible on the chart and represents an area where stronger profit-taking could emerge.

On the downside, failure to hold the current breakout would expose the previous demand zone around $4,420–$4,450. This region played an important role during the latest leg higher and should provide considerably stronger support if the market undergoes a deeper correction. Below there, the next major structural floor sits around $4,240–$4,270. A sustained break beneath that area would significantly weaken the sequence of higher lows and force a reassessment of the bullish outlook.

Overall, the chart suggests that Gold has transitioned from recovery into a more established bullish continuation phase. The immediate challenge is whether buyers can convert the $4,640–$4,670 region into support. If they succeed, the technical path increasingly opens toward $4,900, with temporary pullbacks likely to remain corrective while the higher-low structure stays intact.

TRADE RECOMMENDATION

BUY GOLD

ENTRY PRICE: 4,640

STOP LOSS: 4,500

TAKE PROFIT: 4,890

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Gold Powers Higher as US Fiscal Fears Fuel Rush Into Bullion

Technical Analysis

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