19.08.202612:22 Forex Analysis & Reviews: XAU/USD – Price Analysis and Forecast: Gold Shows a Moderate Recovery

Gold (XAU/USD) is trading within the same sideways range. The U.S. dollar continues to attract sellers and appears to have slowed the fairly successful recovery seen this week after reaching a two-month low, which is acting as the main supporting factor for the precious metal. Nevertheless, bulls should wait for additional signals regarding the U.S. Federal Reserve's future steps before opening long positions.

Market participants should pay attention to the upcoming release of the FOMC meeting minutes amid inflation uncertainty caused by rising energy prices due to the Middle East crisis. In fact, oil prices have reached a nearly three-week high amid escalating tensions between the United States and Iran over the strategically important Strait of Hormuz. President Donald Trump confirmed that the United States is not holding negotiations with Iran and that the naval blockade of Iranian ports remains in place. Moreover, Trump published a map on social media showing the Strait of Hormuz as new U.S. territory.

On the other hand, Iranian Parliament Speaker Mohammad Bagher Ghalibaf stated that this crucial waterway would remain closed until the United States fulfills the conditions agreed upon in the June memorandum of understanding. This supports the geopolitical risk premium and contributes to higher oil prices, increasing concerns about inflation and pushing the yield on 30-year U.S. bonds to its highest level since June 2007. In addition, CME Group's FedWatch Tool shows that market participants still price in a probability of approximately 68% of a Fed rate hike by the end of the year.

ING analysts note that the U.S. Dollar Index (DXY) "rebounded from its monthly low," emphasizing that "the dollar is not yet ready for a sustained decline." They identify "higher energy prices and rising 30-year Treasury yields" as two key factors providing short-term support, noting that "if these factors persist, the question of a Fed rate hike in September could become relevant again."

Regarding the energy sector, ING emphasizes that "news that Washington appears unwilling to extend the 60-day ceasefire with Iran contributed to further increases in oil and gas prices." Although "no one can predict the direction of the next significant move in energy prices," the bank notes that "higher energy prices are positive for the dollar, both due to U.S. energy independence and the Fed's response."

In addition, persistent geopolitical uncertainty may discourage bears from opening new positions against the U.S. dollar, calling for a cautious approach when positioning for a possible further rise in precious metal prices.

From a technical perspective, XAU/USD is struggling to hold above the 9-day EMA and remains well below the 200-day simple moving average (SMA). This maintains a bearish bias in the near term, despite the metal consolidating near its recent highs. At the same time, the oscillators are positive, confirming the bulls' advantage. Resistance is at 4450, followed by the 200-day SMA. The 9-day EMA provides support, followed by the round-number level of 4300, where the 200-day EMA is located.