Gold Soars Amid Buying
Gold prices rose sharply by more than 1.5% on Wednesday (July 23rd), hitting a new two-week high. XAU/USD traded around US$4,146 per troy ounce after dropping to US$4,076 daily.
Gold's rally occurred after the price broke through a key resistance line. Buyers returned as the price fell, allowing bullion to surpass the US$4,100 mark and opening up the opportunity for further gains.
Sentiment for gold was also boosted by a weakening US dollar. The US dollar index (DXY) fell 0.07% to 101.12, making gold more attractive to buyers using currencies other than the dollar.
However, risks from the Middle East remain high. US President Donald Trump warned Iran that any attack on ships would be met with attacks on bridges or power plants. These tensions helped push WTI up more than 6% to around US$86.80 per barrel.
On the other hand, the 10-year US Treasury yield rose to nearly 4.654%. The money market now estimates a 65% chance that the Fed will hold interest rates at its July 29 meeting, down from 78% the day before. This means expectations for a potential rate hike are starting to strengthen again.
As a result, gold still has a chance to test the US$4,150 area as long as the US dollar weakens and buyers are able to defend the US$4,100 area. However, if the war escalates and energy prices continue to rise, the dollar could strengthen again as a safe haven, while expectations of higher Fed interest rates could limit the XAU/USD rally.
The next focus is on US jobless claims data, the S&P Flash PMI, and the Fed's decision next week.
Source: Newsmaker.id
