Safe-Haven Demand Persists as Gold Builds Momentum for a Breakout

Summary:

Uncertainty surrounding U.S.-Iran relations remains elevated, while investors continue to await greater clarity on the Federal Reserve's policy path. As a result, gold prices remain range-bound. With market volatility continuing to contract, gold is approaching a decisive breakout point and retains a bullish bias in the near term.

BUY XAUUSD

EXP

TRADING

4081.86

Entry Price

4398.00

3950.00

4097.19 +42.17 +1.04%

0.0

Pips

Flat

3950.00

Exit Price

4081.86

Entry Price

4398.00

Fundamentals

Gold traded within a narrow range on Tuesday, extending its recent consolidation pattern. Investors remained cautious amid lingering uncertainty over the U.S.-Iran peace process and a lack of fresh signals regarding the Federal Reserve's monetary policy outlook, resulting in subdued market activity.

The uncertainty surrounding the Fed's policy trajectory continues to be the primary driver of gold prices. Expectations for interest rates influence both the U.S. dollar and Treasury yields, which in turn directly affect the appeal of non-yielding assets such as gold. Meanwhile, although geopolitical tensions in the Middle East have eased compared with previous weeks, they have not fully disappeared and continue to provide underlying safe-haven support for the precious metal.

Notably, while Iran has denied engaging in formal negotiations with the United States, discussions with Oman regarding the reopening of the Strait of Hormuz have reportedly made progress. Should shipping operations gradually return to normal, global energy supply risks would likely ease further, reducing the likelihood of sustained oil price gains and renewed inflationary pressure. Under such a scenario, the need for additional monetary tightening by the Federal Reserve would diminish, creating a more supportive environment for gold over the medium term.

Safe-Haven Demand Persists as Gold Builds Momentum for a Breakout_1

Technical Analysis

Gold closed July with a moderately bullish monthly candlestick featuring a relatively small real body, in line with our expectation for a medium-term recovery and suggesting that bullish momentum is gradually strengthening.

On the daily chart, gold remains confined within a consolidation range, indicating that the market has yet to break out of its medium-term sideways pattern. However, the continued narrowing of the Bollinger Bands suggests that volatility is contracting and that the market is approaching a directional move.

Meanwhile, the Relative Strength Index (RSI) is holding near 48, remaining in neutral territory but showing signs of stabilization. The MACD continues to trade above the zero line, indicating that bearish momentum is fading while bullish momentum is gradually building. Together, these signals suggest that the probability of an upside breakout is increasing.

A decisive break above the upper boundary of the current consolidation range would likely open the door to a fresh leg higher. Conversely, a sustained move below the key support levels at $4,009 and $3,983 would invalidate the current recovery structure and undermine the bullish outlook, potentially sending gold back toward lower support levels.

Trading Strategy

Direction: Buy

Entry Price: 4053

Target Price: 4398

Stop Loss: 3950

Valid Until: August 29, 2026, 23:55

Support: 4009, 3983, 3959

Resistance: 4084, 4116, 4120

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