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13/08/25
19
Gold Struggles to Sustains Gains Amid Mixed Market Signals
Gold experienced a tentative recovery early Wednesday, buoyed by the release of U.S. inflation data, but faces significant hurdles ahead. The precious metal struggled to build momentum beyond the $3,350 mark, with technical indicators on the four-hour chart signaling a bearish outlook. The ability of gold to sustain any gains may hinge on upcoming comments from Federal Reserve officials, amid a backdrop of rising market optimism.
Market sentiment has been boosted by a range of positive geopolitical and economic developments. Notably, the extension of the US-China trade truce, potential high-level meetings involving US and Russian leaders, and increasing expectations of a September interest rate cut by the Fed have fostered a risk-positive environment. The benign July Consumer Price Index (CPI) figure of 2.7% further eased inflation fears, bolstering expectations of dovish monetary policy. Consequently, US Treasury yields declined, diminishing the attractiveness of the dollar and supporting non-yielding assets like gold. Nevertheless, gold’s demand as a safe haven has waned somewhat with risk appetite improving and broader dollar weakness.
Looking forward, the market’s trajectory will likely depend on Federal Reserve signals, especially in the absence of key macroeconomic reports. Supportive factors include strong demand for gold from China and India — two of the largest consumers — as well as continued central bank purchases, which could provide some buoyancy to prices. Conversely, if technical support levels are breached, particularly below the key $3,346 threshold on the four-hour chart, a further decline toward $3,300 or lower may ensue.
In terms of broader market dynamics, the terms “risk-on” and “risk-off” describe investor appetite for assets depending on economic outlooks. During risk-on phases, equities and commodities tend to rise, while safe-haven assets like gold and government bonds often underperform. Conversely, in risk-off periods, investors flock to safety, benefiting assets such as the US dollar, Japanese yen, and Swiss franc, as well as gold. The currencies of commodity-rich nations tend to appreciate during risk-on phases due to increased demand for raw materials.
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