Today's Gold Drop Could Be a Buying Opportunity for the Upcoming Bullish Trend
Gold's decline this morning was driven more by a strengthening dollar, rising yields, and profit-taking, rather than a trend reversal. If the price remains above the USD 3,320-3,324 support level, the medium-term bullish trend remains secure.
The 10-year Treasury yield edged higher again on speculation that interest rate cuts may not be as aggressive as market expectations. The rise in yields reduces gold's appeal as a non-yielding asset.
Meanwhile, Trump's move to challenge the Fed's independence created market volatility. Gold, known as a safe haven asset during times of heightened uncertainty, managed to maintain its position at a high level of around USD 3,370 per ounce. Analysts believe that if the perception of the Fed's independence is further eroded, investor confidence in the dollar could weaken further.
Furthermore, dovish comments from Fed Chairman Jerome Powell at the Jackson Hole symposium added to the belief that an interest rate cut could be imminent. The decline in US bond yields due to expectations of a rate cut further strengthens gold's appeal as a non-yielding asset.
Technically, gold remains bullish. The Relative Strength Index (RSI) (14) is at 54, indicating further upside. A golden cross pattern has formed, with the 21-day SMA breaking above the 50-day SMA, signaling a short-term positive signal. Immediate resistance lies in the USD 3,400-3,440 range, while strong support is around USD 3,324.
Although profit-taking has led to a minor correction, analysts expect the uptrend to remain intact as long as prices remain above key support. A breakout above USD 3,400 has the potential to push gold towards the psychological level of USD 3,500 in the coming sessions.
Investors continue to monitor the dynamics of US monetary policy and the market's response to Trump's political moves. As long as uncertainty regarding the Fed's independence and the prospect of interest rate cuts persists, gold is likely to remain a preferred safe-haven asset.
Source: Newsmaker.id
