Gold climbed to $4,400 an ounce on Tuesday, a two-month high, as Chinese institutional buying and central bank accumulation lift the metal, even as elevated oil prices stoke inflation risk and expectations of higher interest rates. Uncertainty over a potential US-Iran deal adds to the safe-haven bid.
Gold rose to $4,400 per ounce on Tuesday, touching its highest level in two months. Demand for the metal is growing quickly even as elevated oil prices stoke inflation risks and expectations of higher interest rates.
Chinese buying and PBoC reserves fuel the rally
Chinese institutional investors keep building gold positions as a defensive asset amid volatility in other markets, and China's gold-backed ETFs are recording their longest run of inflows in months. The People's Bank of China is reinforcing that demand from the official side.
In July, the PBoC increased its gold reserves by roughly 20 tonnes, after adding about 15 tonnes in June. That June addition was the largest monthly increase since October 2023.
Geopolitical and policy uncertainty keep the bid alive
Uncertainty persists around a potential US-Iran agreement that could end the conflict and reopen the Strait of Hormuz, and investors are also awaiting key US inflation data this week that could shift expectations for future Federal Reserve policy.
Technical outlook: a pullback before the next leg higher
On the H4 XAU/USD chart, the market built a consolidation range near $4,341 before breaking higher to $4,435, and a new consolidation range is forming below that level. A move lower toward $4,370 is expected next, with a possible extension to $4,340, while a further rise toward $4,575 stands as the local upside target. The MACD indicator points to early bearish momentum, with its signal line above the center line at recent highs and starting to turn down.
Next, the H1 chart shows the market breaking above $4,371 and moving up to $4,435 before correcting back to test $4,371 from above, where a broad consolidation range is now forming. A move higher toward $4,460 is expected, followed by a decline back to $4,371. The Stochastic oscillator supports this scenario, with its signal line below 50 and pointing down toward 20, signaling rising short-term downside pressure.
Source: ActionForex
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