Gold has looked solid since the start of the month, with a technical break above $4,200 giving buyers a measure of breathing room. Since then, hopeful optimism around US-Iran tensions — including this week — has afforded the metal further space on its run higher. Bullion's long-standing role as a hedge during periods of geopolitical uncertainty has kept it sensitive to the ebb and flow of those headlines. That optimism even produced an additional technical upshot last week, when gold broke above its 200-day moving average (blue line).

The advance leaves gold in a good spot even though some of that momentum has weakened this week, with traders now gearing up for a showdown with Fed Chair Warsh tomorrow.

The bigger-picture overview looks decent, with buyers continuing to hold above the 200-day moving average (blue line) as well as the 38.2 Fibonacci retracement level at $4,576. That provides confidence that the upside momentum can continue, especially as the dollar remains in limbo for the most part — a relevant backdrop, since bullion is priced in dollars and a greenback without a clear direction removes what is often a meaningful headwind for the metal.

The US Treasury capping yields will continue to act as a key tailwind for gold, meaning the bond market will offer plenty of clues as to whether the price resurgence has more room to run for the precious metal. The mechanics are straightforward: gold pays no interest, so capped or falling yields reduce the opportunity cost of holding a non-yielding asset relative to bonds.

The short-term chart is more mixed, with buyers now doing battle around the 100-hour moving average (red line). Holding above that level is needed to maintain a more bullish near-term bias. For now, there is fallback potential to around $4,580, with dip buyers having stepped in overnight.

However, a break back below $4,575 would leave considerable scope for a move lower, with the 200-hour moving average (blue line) sitting a fair distance away, closer to $4,525. That level also rests near the 200-day moving average, currently seen at $4,524 — levels that warrant close attention.

Trading is expected to remain subdued today, as all eyes turn to Fed Chair Warsh's keynote speech at Jackson Hole tomorrow. The annual symposium, hosted by the Federal Reserve Bank of Kansas City in Wyoming, has a history of serving as a stage for major policy signals — Ben Bernanke used his 2010 address to preview a second round of quantitative easing, and Jerome Powell used his 2022 speech to warn that fighting inflation would bring "pain." The event may not live up to its billing, but it remains one that markets have to watch carefully just in case, especially now that the lines have been blurred by the activation of the "Bessent put" — a nickname borrowed from the long-standing "Fed put" shorthand for perceived central-bank backstops, here reflecting expectations that the Treasury under Secretary Scott Bessent will lean against rising yields.

As things stand, traders are growing more convinced that there will be no rate hike in September. The odds of such a move have now dropped to roughly 35%. Meanwhile, only about 27 basis points of rate hikes are priced in by year-end, and only about 43 basis points of rate hikes are priced in by June next year.

Any further dovish signals would continue to help that repricing along and bolster the conditions around gold — should they come from Warsh. Beyond Jackson Hole, incoming US inflation and employment data will offer the next checkpoints for how those rate expectations, and by extension gold's broader macro backdrop, take shape.

Source: Investinglive