Gold Sees Dip from Two-Week High Amidst Stronger USD

Gold prices have dropped from their recent peak of $3,400, largely due to the rising strength of the US dollar.

Speculations surrounding Waller as a potential successor to Powell have also supported the dollar.

Currently, gold is trading below $3,380, and there are expectations it may adjust further to around $3,350.

On Friday, the robust US dollar weighed on precious metals, with news reports indicating that Waller is a leading candidate for the Fed chair position. This has left some investors feeling cautious about central bank reliability, consequently bolstering the dollar.

Nonetheless, any rebounds in the dollar may face limitations. It’s widely anticipated that candidates aligned with Trump’s agenda will pursue lower interest rates. Additionally, surprising unemployment claims and moderate growth in unit labor costs reported on Thursday might keep the possibility of a rate cut in September alive.

Technical Analysis: XAU/USD Nears Support Point at $3,380

The recent 4-hour chart indicates that the XAU/USD pair is testing the lower boundary of a rising wedge. There’s also a bearish divergence in the relative strength index (RSI) backing this trend.

If the trendline support dips below $3,380, it could intensify the pressure towards $3,360, recalling levels from August 6th. The target for this wedge could potentially hit around $3,350 as noted on August 5th.

On the flip side, the price has struggled to surpass the 78.6% Fibonacci retracement from the late July sell-off, remaining just above the $3,400 mark. Looking ahead, the next potential upward target could be around $3,440, initially seen on July 22nd, with a peak observed in June close to $3,450.