17.08.202609:50 Forex Analysis & Reviews: Gold Needs to Break Above $4400

Gold rose 0.4% today to $4,391.60 per ounce, continuing a two-week ascent and closely approaching the $4,400 mark after a nearly 1% increase last week. Silver increased by 1.3% to $65.54, adding nearly 2% the week prior. Platinum and palladium also saw gains. The dollar index decreased by 0.1%.

The main driver of growth was the weakening of the American currency. Latest data from the U.S. showed declines in both consumer sentiment and retail sales, easing concerns about an imminent interest rate hike, which traditionally poses a challenge for non-yielding metals. However, geopolitical instability continues to cloud the outlook, meaning the risk of tightening monetary policy remains. At the end of last week, new ships were attacked in the Strait of Hormuz, and the U.S. announced preparations for new measures aimed at undermining Iran's economy.

Interestingly, the practice of shadow shipping helps contain the rise in global energy prices. Some vessels leave the strait with their satellite transponders turned off, allowing oil to be transported while avoiding risks and restrictions. Iran and Oman appear to be approaching an agreement on the management of this vital waterway. However, the U.S. is not a party to these negotiations, leaving the question of actual restoration of free passage open.

The recovery of gold above the key threshold of $4,000 per ounce relies on two fundamental factors: renewed investor interest and increased purchasing volumes by central banks, primarily from China. The increase last week marked the first time since April that the metal rose above the 100-day moving average, and the price is currently hovering near this level. However, to confirm gold's potential for further growth, a significant breakout above $4,400 will be required.

Such a driver could be the minutes from the July FOMC meeting, expected to be published on Wednesday. It should clarify how deep the rift within the central bank has been, where three committee members advocated for an immediate rate hike, and how close the centrist portion of the committee has come to their position.

Regarding the current technical outlook for gold, buyers need to break through the nearest resistance at $4,432. This would allow targeting $4,481, above which it will be quite challenging to break through. The furthest goal will be the area around $4,546. In the event of a decline, bears will attempt to take control at $4,372. If this is accomplished, a breakout of the range will inflict serious damage on bullish positions and drive gold to a low of $4,304, with the prospect of reaching $4,249.