Gold has climbed to a three-month high, with weekly gains on track to exceed 5.6%, despite robust activity in the US services sector. The latest developments in the Middle East, combined with a softer US dollar, have underpinned the precious metal, pushing prices beyond the $4,600 mark. Spot gold is currently trading at $4,622, up more than 2.3%.
US services data came in strong, yet spot gold still hit a three-month peak. The August S&P Global US Services PMI registered 56.8, surpassing the market consensus of 54 and marking the highest reading since December 2024, well above July's 54.6. However, the data was not uniformly positive: the Manufacturing PMI slipped from 53.9 to 53.2, hitting a five-month low. Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, noted in a statement that US business activity is thriving, with firms reporting that the pace of output growth in the third quarter has hit a four-year high as economic expansion momentum strengthened further in August.
Investors largely shrugged off the data, with attention remaining on the US Treasury's bond buyback program. US Treasury Secretary Scott Bessent indicated that the government's next phase of policy would place greater emphasis on fiscal consolidation. Bessent added that the administration may expand Treasury buyback operations further, following the release of plans to double the scale of long-dated bond repurchases. Meanwhile, the US dollar index, which measures the greenback against six major currencies, held steady near 98.82, yet failed to curb gains in gold, a non-yielding asset. US Treasury yields moved higher, with the 10-year note up 0.8% to 4.75%.
Data released on Friday showed that Poland's central bank slowed its gold purchases to 7.8 tonnes in July. According to PrimeTerminal data, money market pricing indicates a 60% probability that the Federal Reserve will hold rates steady at its September meeting, down from 68% the previous day, while the odds of a 25-basis-point hike remain around 40%.
Spot gold technical outlook: uptrend persists, bulls target $4,700. After reclaiming the 200-day simple moving average (SMA) at $4,514, the trend has turned bullish, driving prices above $4,600. The Relative Strength Index (RSI) signals that current upward momentum remains in bullish territory, suggesting gold could continue to climb in the near term. The first resistance level for spot gold sits at the psychological $4,650 mark, with the next target at $4,700. Should both levels be breached, the subsequent objective is the May 8 high of $4,749, followed by $4,800. On the downside, if prices retreat below $4,600, initial support lies at the 200-day SMA of $4,514, followed by $4,500; further down, support is at the 100-day SMA of $4,379, then $4,300; below that, the next support level is the 50-day SMA at $4,164.
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