Gold prices remained volatile late Monday.
Market reaction
Investors responded to a tsunami of geopolitical and economic news, sending the precious metal from sizable gains into negative territory and back again. The white metal experienced a drop in value on Tuesday morning, sinking closer to $3,351.39. This fluctuation comes against the backdrop of U.S. political maneuvers, particularly actions taken by President Trump, which have raised concerns regarding economic stability and Federal Reserve independence.
Late Monday night, President Trump tweeted out his intention to impose new tariffs. This politically-motivated decision would severely undermine U.S. trade relations and rattle market confidence. He similarly attempted to knockout Federal Reserve Governor Lisa Cook. Many analysts say this unprecedented move endangers the autonomy of the central bank. These changes have resulted in greater volatility in the financial markets, providing a bullish impact on investor sentiment towards gold.
Fourth of the big four gauges, the U.S. Consumer Confidence Index added to the melange, moving a notch downward in August. At the same time, consumers are growing more worried about the health of the economy. Given this accelerating uncertainty, gold is becoming a particularly appealing safe-haven asset.
In spite of these headwinds, XAU/USD was able to trade near fresh weekly highs. The most recent technical analysis indicates that gold is overdue to begin adding to its gain. The 20 Simple Moving Average (SMA) at about $3,350 is holding strong as support. This simple moving average provides excellent intraday support for XAU/USD. As a consequence of this, it remains under-supplied and situated above all other moving averages.
Additionally, asylum technical indicators have made their way north with XAU/USD showing a neutral-to-bullish state of affairs signify with the day by day chart. The momentum indicator remains in neutral territory. This indicates further upside potential, but traders need to be careful.
Here’s what the 4-hour chart analysis suggests XAU/USD bullish in the short term. Despite the choppy price action, it has remained resilient, peaking at over $3,386 earlier this week to illustrate that point. It’s clear that investors will be tuning into major economic data releases over the next weeks, as well as significant geopolitical events capable of impacting gold prices.