FX.co ★ XAU/USD, GOLD

Gold Daily Outlook Update Gold (XAU/USD) takes advantage of the intraday breakout above the 200-day Simple Moving Average (SMA). The price is rising during the first part of the European session on Friday to its highest level since late May. Gold remains on course to record positive performance for the third week in a row amid a broadly weak US Dollar (USD). Traders pared expectations of an upcoming rate increase from the Federal Reserve (Fed) in the wake of last week's US inflation report, which showed signs of easing inflationary pressures. Thus, it has left the dollar weakened to around its lowest in more than three months on Thursday. However, investors remain wary of inflation risks stemming from higher oil prices amid the US-Iran row over the Strait of Hormuz. Moreover, another factor contributed to a 10% escalation in oil prices. Last week eight commercial vessels carrying oil were supposedly attacked by Yemen-based militants affiliated with Iran, who blocked maritime routes for shipping oil from Saudi Arabia since the end of July. This factor somewhat undermines the strategy of doubling the scale of certain operations to repurchase the existing US debt from the open market. On the other hand, the release of the minutes on Wednesday. The FOMC meeting held July 28-29 showed that officials suggested the need for rate hikes in the coming period unless further progress in cooling inflation was made. On top of all that, the CME Group's FedWatch Tool shows that market participants believe the Fed has about a 68% probability of raising rates at least once this year. All this, together with ongoing geopolitical tensions, can help contain losses for the safe-haven dollar and cap bullish players from positioning further up in gold.

Indeed, there is evidence that the XAU/USD pair has find acceptance above the 200-day SMA. Bulls are currently waiting for a breakout above the 61.8% Fibonacci retracement of the fall from April to June to trade with new positions. Furthermore, the Moving Average Convergence Divergence (MACD) technical indicator is trading in positive territory. Lastly, the Relative Strength Index (14) is approaching the overbought region at 67.70. However, given the overall technical environment, a positive stance can be adopted in the short run. Therefore, consolidation beyond the 61.8% Fibo level at $4,529 would lay the foundation for upside toward the 78.6% retracement at $4,687, before reaching the cycle high at $4,889. On the downside, the first level of resistance comes at the 61.8% retracement at $4,529.03, with next levels at the 200-day SMA at $4,514.16 and further below at the 50% retracement at $4,417. Further support exists at the 38.2% retracement at $4,306