Gold (XAU/USD) staged a notable rebound on Monday, climbing over $30 from a two-week low observed earlier during the Asian session around the $3,324–3,323 region. The recovery underscores a growing interplay between US bond yields, Federal Reserve (Fed) policy expectations, and geopolitical developments, which continue to shape the dynamics of the safe-haven bullion. In this article, Steve Fargo, a broker at AureliusHub, unpacks the complexities of the topic in a clear and structured way.
The recent slide in US Treasury yields has provided a tailwind for Gold, which, as a non-yielding asset, benefits when interest rates decline. Market participants increasingly anticipate that the Fed will resume its rate-cut cycle in September, triggering a renewed downtrend in yields.
This backdrop, combined with repositioning trades ahead of high-profile international meetings, including the US President’s bilateral discussions with the Ukrainian President and broader talks with European leaders on a potential peace deal in Ukraine, has lent additional support to the XAU/USD pair.
Despite the rebound, the US Dollar (USD) ticked higher amid diminished expectations of an aggressive Fed easing. This modest USD strength, coupled with a risk-on market sentiment, may temper Gold’s upside potential in the near term. Traders remain cautious, preferring to await FOMC meeting Minutes and Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium later in the week for clearer directional cues.
Market Movers: Gold Supported by Falling US Bond Yields
Investor sentiment is increasingly aligned with expectations of Fed rate cuts, with the CME Group’s FedWatch Tool suggesting a high probability of at least two 25-basis-point reductions by year-end. The backdrop of geopolitical uncertainty, most notably the Ukraine-Russia conflict, further boosts the appeal of safe-haven assets, supporting Gold demand.
Recent economic data has added nuance to the market outlook. US producer prices surged in July at the fastest monthly pace since 2022, tempering bets for a jumbo 50-basis-point Fed cut and lending some support to the U.S. dollar. Meanwhile, preliminary University of Michigan data indicated a rise in one-year inflation expectations to 4.9% from 4.5%, and a five-year forecast increase to 3.9% from 3.4%, signaling sustained price pressure momentum.
The US Consumer Sentiment Index dropped unexpectedly to 58.6 in August from 61.7 in July, highlighting weakness in public confidence, while the Expectations Index eased to 57.2 from 57.7.
Conversely, US retail sales data from the Census Bureau revealed a 0.5% monthly increase in July, following a revised 0.9% gain in June, in line with market estimates. These mixed economic indicators reinforce market caution ahead of critical Fed updates.
Technical Outlook: Intraday Bullish Momentum for Gold
From a technical perspective, Gold’s intraday rebound from the 61.8% Fibonacci retracement level of the July upswing has reinforced bullish sentiment. A subsequent move above the 200-period Simple Moving Average (SMA) on the 4-hour chart adds further credibility to potential upside scenarios. Momentum indicators on the H4 timeframe are also gaining positive traction, supporting the case for continued intraday gains.
Key resistance levels to watch include the $3,355 zone, representing the 50% Fibonacci retracement, and the $3,372–3,374 region, corresponding to the 23.6% retracement. Should buyers maintain pressure, Gold could reclaim the $3,400 mark, with a potential test of the monthly high near $3,408–3,410.
On the downside, immediate support is anchored at the 200-SMA on H4 (~$3,346) and the $3,324–3,323 zone, coinciding with the 61.8% Fibonacci retracement. A failure to defend these levels could expose Gold to a decline toward the $3,300 round figure, followed by horizontal support near $3,283–3,282 and further down to the $3,268 region, representing the late June swing low.
Geopolitical and Macro Drivers Remain Key
Beyond technicals, Gold remains highly sensitive to geopolitical developments. Traders are closely monitoring US-Ukraine bilateral talks, as well as broader European diplomatic engagements, for cues that could sway safe-haven demand.
In addition, upcoming releases such as the FOMC Minutes and Powell’s remarks at Jackson Hole are expected to influence the near-term trajectory of Gold, particularly through their impact on interest rate expectations and US Treasury yields.
Conclusion
Gold’s recovery from a two-week low reflects a complex blend of monetary policy expectations, sliding US bond yields, and geopolitical developments. Technical indicators favor XAU/USD bulls in the short term, yet the USD and a risk-on sentiment could cap the rally.
Critical resistance levels at $3,355, $3,372–3,374, and $3,400 will determine the pace of further gains, while support at $3,346, $3,324–3,323, and $3,300 remains vital for maintaining the positive momentum ahead of key market catalysts.
