Article by: ETO Markets

Gold price (XAU/USD) has been driven by a number of factors, notably rising tensions in the Middle East and expectations that the Federal Reserve may cut interest rates by 50 basis points in September. These factors have provided strong support for safe-haven gold. Fears of a wider conflict in the Middle East boosted safe-haven demand for gold on Monday as Israel stepped up its military campaign in the Gaza Strip and the conflict between Ukraine and Russia escalated. In addition, the dovish stance of the Fed further weighed on the performance of the dollar, supporting the non-yielding gold price. However, gold's gains were capped by some traders taking profits as sentiment turned positive, especially ahead of key US inflation data.

From a technical point of view, gold has further consolidated its uptrend after breaking through the resistance area of $…-…, and the volatility indicator on the current daily chart continues to move higher, indicating that the uptrend in gold prices remains solid. As gold nears the all-time high of $…-… set in July, the market expects bulls to attempt a further break above the psychological $… level, which, if successful, will set the stage for further gains. On the other hand, a pullback below the $…- $… support could trigger a further pullback, testing the $…- $… area and possibly even a fall to the 50-day SMA support of $…- $… area.