Heightened geopolitical tensions following Pelosi’s contentious visit to Taiwan appear to have lent themselves to stronger bids for gold, with the precious metal having already benefitted from the moderating US dollar and Treasury yields.
Bullion rose to within touching distance of the psychologically-important $1800 level, only to be resisted by its 50-day simple moving average (SMA) for the time being.
Still, spot gold remains on course for a third consecutive weekly gain while having wiped out almost all of July’s losses.
Persistent fears over geopolitical tensions and recession risks could help gold reassert its safe-haven credentials.
Ultimately, in order for the precious metal to extend its recovery, the US dollar would have to move lower on pared bets for more jumbo-sized Fed rate hikes in the pipeline.
Lower-than-expected headline prints out of today’s US jobs report and next week’s CPI release may allow spot gold to resurface above $1800 and stay there, provided the tier-1 data amplifies the notion that the Fed can start to dial down its aggressive inflation-fighting stance.