Gold Strengthens: Will the Rally Continue into the European Session?
Gold prices edged higher ahead of the European session opening on Thursday (August 6). Spot gold traded around US$4,265 per troy ounce after briefly touching a seven-week high. This rally indicates robust buying interest, despite the sharp price increases seen over the last few sessions.
Fundamentally, gold is supported by a weakening US dollar and declining US government bond yields. Weaker-than-expected ADP private sector employment data has also led the market to scale back expectations for Federal Reserve interest rate hikes. A lower interest rate environment typically benefits gold, as the asset does not yield interest.
Developments in the Strait of Hormuz are also influencing gold's movement. Hopes for a deal between Iran and Oman have weighed on oil prices and eased inflation concerns. Although geopolitical tensions are subsiding, the drop in oil prices actually aids gold by reducing the likelihood of a Fed rate hike. Market focus now shifts to US labor data—specifically Non-Farm Payrolls (NFP)—which could determine gold's next direction.
From a technical perspective, the short-term trend remains bullish after the price broke above the 50-day moving average near US$4,160. The US$4,250–US$4,240 zone serves as the immediate support level. As long as the price holds above this area, gold has the potential to test the psychological resistance level of US$4,300, followed by US$4,325.
Newsmaker Analysis: Heading into the European session, gold retains the potential for further gains, though the risk of profit-taking is rising given the rapid pace of the rally. If the price can break and sustain itself above US$4,300, bullish momentum may continue. Conversely, a failure to clear that level could trigger a correction toward US$4,250 or US$4,200 before the market establishes a new direction. (asd)
Source: Newsmaker.id
