gold prices continued their upward trajectory early Monday, reaching their highest levels in five months. With the market open in a subdued trading environment due to the US and Canadian labor holiday, gold has experienced steady gains, approaching the pivotal $3,500 level. The recent rally extends a five-day winning streak, driven by a combination of geopolitical and economic factors.
A key factor supporting gold ’s gains is heightened risk aversion in the markets. Following declines in Asian equities, notably the Japanese nikkei 225, safe-haven demand for bullion has surged. This renewed investor caution is partly influenced by ongoing trade uncertainties and a US court ruling deeming President Donald Trump’s imposed tariffs largely illegal. Despite this setback, US Trade Representative Jamieson Greer indicated that negotiations with trade partners are likely to persist, emphasizing the incomplete nature of the dispute. Additionally, the Chinese Caixin Manufacturing PMI for August surprised markets by rising to 50.5, signaling an expansion in Chinese manufacturing activity and further bolstering gold ’s appeal as a hedge.
Market sentiment is also heavily influenced by expectations surrounding US monetary policy. The probability of a rate cut this month has risen sharply, with markets indicating a roughly 90% chance of the Federal Reserve easing monetary policy. Recent data, including the US Core Personal Consumption Expenditures Price Index, has reinforced expectations of dovish policy moves. Upcoming US employment figures, particularly Nonfarm Payrolls, are expected to provide critical insights into the health of the labor market and will likely influence the timing and magnitude of future rate adjustments.
From a technical perspective, the gold chart remains supportive of further gains. The relative strength index (RSI) hovers below overbought territory but remains within a bullish zone, and moving average crossovers point to continued strength. Resistance near the $3,500 mark presents the immediate upside target, with psychological levels at $3,550 potentially coming into focus if momentum persists. On the downside, initial support is seen at approximately $3,437, with a sustained breach below that level opening risk toward earlier lows around $3,373. Overall, gold remains poised for further appreciation amid a complex interplay of geopolitical risks, economic data, and monetary policy expectations.
