FX.co ★ XAU/USD, GOLD

Gold Outlook: Dollar Weakness and Fiscal Concerns Keep Buyers in Control Gold (XAU/USD) is entering the final part of August with a strongly constructive fundamental backdrop, although the metal is becoming increasingly sensitive to profit-taking after a powerful weekly advance. Using the $4,603 price supplied for this analysis, gold remains supported by a combination of softer U.S. dollar sentiment, concerns surrounding U.S. government debt, shifting expectations for Federal Reserve policy, and continuing geopolitical risk. Reuters reported that gold gained more than 3% on August 19 after the U.S. Treasury announced that it would double the size of certain long-dated Treasury buyback operations to at least $4 billion per operation. The announcement initially pushed long-term Treasury yields lower and weakened the dollar, creating favorable conditions for non-yielding gold. The broader fiscal story is also important: U.S. government debt has moved above $40 trillion, while the Treasury's intervention has raised questions about the sustainability of long-term borrowing costs and the dollar's purchasing power. Reuters reported that the dollar subsequently recovered modestly as Treasury yields rebounded, but the Dollar Index was still around 98.80 on August 21, near a three-month low. At the same time, the Federal Reserve remains caught between persistent inflation and signs of slowing economic momentum. The July FOMC minutes showed that several policymakers were concerned enough about inflation to favor a possible rate increase, while more recent employment and retail-sales data have reduced expectations for an immediate September hike. A Reuters economist poll found that a strong majority expects the Fed to leave rates at 3.50%-3.75% through the end of 2026, although inflation is expected to remain above the 2% target for an extended period. This creates a complicated environment for gold: higher rates and higher real yields remain a downside risk, but expectations of stable rather than aggressively tighter policy, combined with fiscal concerns, are encouraging investors to maintain exposure to precious metals. Geopolitical risk adds another layer of support. The continuing U.S.-Iran conflict and uncertainty surrounding the Strait of Hormuz have pushed oil prices higher, increasing inflation uncertainty and reinforcing demand for traditional defensive assets. The next major catalyst is Federal Reserve Chair Kevin Warsh's appearance at the Jackson Hole symposium, where markets will look for clues about the Fed's tolerance for above-target inflation and the possibility of future rate changes. Daily Chart: Strong Momentum Meets a Critical Resistance Zone The bullish structure remains dominant. Gold has advanced sharply from the August 18 area near $4,365, with Reuters reporting that spot gold reached its highest level since early June during the subsequent rally. The move toward the $4,600 region represents a significant recovery and places the price above the major moving-average structure that previously supported the medium-term trend. Recent daily assessment showed XAU/USD holding above its 100-day moving average and trading well above its 20-day average, while the daily RSI was around 66, indicating positive momentum without yet reaching an extreme overbought reading. The same broader structure remains relevant even though price has moved considerably higher since that assessment. Using the recent swing zone around $4,365-$4,670, the 38.2% Fibonacci retracement is approximately $4,553, while the 61.8% retracement is near $4,482. These levels provide useful reference points if the current rally pauses.

The psychological $4,600 area is now an important pivot, while $4,625-$4,670 represents the immediate resistance band. A decisive daily close above $4,670 would strengthen the case for an extension toward $4,700 and potentially $4,800. Conversely, repeated rejection near $4,650-$4,670 could trigger a corrective move toward $4,550. The CCI would be expected to remain in positive territory while price holds above the short-term moving averages, confirming that buyers continue to control momentum. Traders should nevertheless avoid chasing an extended candle because gold has already recorded a substantial weekly increase; Comex gold futures gained about 5.56% for the week ending August 21, according to Dow Jones Market Data. Therefore, the more attractive technical approach is to wait for either a confirmed breakout or a controlled retracement rather than entering aggressively at the middle of the range. Trading Strategy: Buy Dips Above $4,550, Sell Only on Confirmed Breakdown The short-term bias remains bullish above $4,550, with $4,600 acting as the immediate decision point. For an intraday or short-term long position, a preferred entry zone is $4,575-$4,610 after a successful retest and bullish price-action confirmation. The initial take-profit objective is $4,670, followed by $4,720 if momentum accelerates through the August high zone. A protective stop can be placed around $4,535, below the 38.2% Fibonacci area and beneath the immediate breakout structure. This provides a reasonable risk-to-reward profile if the market reaches the upper targets. For a longer-term bullish plan, traders can consider accumulating on deeper pullbacks toward $4,520-$4,560, with a wider stop near $4,450 and upside objectives at $4,750, $4,900, and potentially the psychological $5,000 region. The bullish case would weaken substantially if gold produces a sustained daily close below $4,450 because that would signal that the recent momentum surge is losing its structure. On the bearish side, short-term traders should avoid selling simply because gold appears expensive. A more reliable short setup would require a clear rejection from $4,650-$4,700, followed by a daily or strong intraday break below $4,550. Such a breakdown could offer a short entry around $4,535-$4,550, with a stop near $4,625 and targets at $4,480 and $4,400.