Gold is in a range, but testing its upper bound

Over the past 12 weeks, gold has been trading within a narrow range, the boundaries of which are gradually narrowing. The 50-day moving average has once again provided support. At the same time, the main driver of growth has been a resurgence in risk appetite, which has supported a decline in yields on long-term government bonds, gold’s main competitor.

At the same time, we note with some caution the trend towards a stronger dollar, which is a headwind for precious metal prices.

The minutes of the June FOMC meeting helped the precious metal. Two officials are ready to vote to ease monetary policy as early as July. The doves are focusing on the cooling labour market and the reluctance of inflation to accelerate.

The chances of Gold breaking out of the $3250-3450 trading range are slim. Gold is supported by high appetite from central banks and a high degree of uncertainty. Nevertheless, the rapid rally of the precious metal in 2022-2025 suggests that it is overbought.

A confident move into the $3370-3400 range in the new week will be an important signal of a bullish breakout, capable of quickly pushing prices to new record highs. However, this is not a guaranteed scenario, and remaining in the $3300-3350 range will set the stage for further consolidation and increase the risk of a downward breakout from the range.

The FxPro Analyst Team