Gold prices are holding steady near all-time highs, as a weakening dollar provides support for precious metals even as risk sentiment improves.
Strength in risk assets, such as equities, continues, but gold is showing no signs of substantial retracement as a soft dollar keeps gold prices in the region of $3,400.
“The precious metals complex has been the clear beneficiary of the technical breakdown in the USD index (DXY), with the intraday relationship between gold and the DXY becoming notably tight,” said Chris Weston Head of Research at Pepperstone.
“Client volumes on gold have picked up over the past 24-36 hours, with XAUUSD holding the top spot as the most traded market. The upbeat flows through the market have seen spot gold emphatically breakout of the of $3370 to $3300 trading range it has held since early July, with front-month gold futures settling firmly above $3400 and holding the big figure through Asia.”
Weston continued to explain that the weaker dollar was likely to persist in the coming weeks, with several factors indicating that dollar rallies are likely to be short and shallow.
“For now, the gold market takes its steer from the USD, and as we approach the 1 Aug tariff implantation date, and the risk of an early shadow Fed chair nominee and renewed central bank policy divergence, USD rallies should remain capped and possibly accelerate the USD hedging flows from real money foreign investors.”