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Gold climbs on perceived “dovish” Fed

Gold is taking advantage of the softer US dollar as markets perceive the latest policy clues out of the Fed to be relatively dovish.

The precious metal is trading around its highest levels since early July and is set to register back-to-back weekly gains. Though to be clear, spot gold’s largest weekly gain since March may not be enough to deter its fourth successive monthly loss

Spot gold is now testing a crucial resistance level at present, being the downtrend line since its early-March peak in the immediate aftermath of Russia’s invasion of Ukraine. Gold also finds itself currently within the $1765 region, which was a key support/resistance battleground between September through December.

A meaningful break to the upside could see bullion bulls attempting to revisit the May lows around $1786.

Gold climbs on perceived “dovish” Fed

Gold’s path further north remains contingent on whether the markets can hold on to their perceptions that the Fed is truly starting to turn less hawkish.

Speeches by Fed officials in the coming week, fresh out of the latest FOMC meeting, may well test such perceptions as to whether the Fed has to truly downshift towards relatively-smaller rate hikes.

Should the incoming US nonfarm payrolls unveil higher-than-expected jobs growth in July, that could force markets to ditch the notion that the Fed is ready to ease up on its aggressive stance, prompting spot gold to unwind recent gains.

 

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