Key Takeaways:
- Gold broke above $4,600, its highest since mid-May
- US dollar slid to three-month lows on Treasury buyback concerns
- XAU/USD up 1.40% on the day, 4.9% over five sessions, 12.5% over the month
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Gold breaks above $4,600 as dollar slides to three-month low
Gold traded near $4,590 an ounce Friday after briefly breaking above $4,600, the highest since mid-May, as the dollar slid to three-month lows.
"We've seen the dollar weakening and that has supported not just gold but all precious metals, along with a big change in yields," Brian Lan, Managing Director at GoldSilver Central, said.
Gold was 1.40 percent higher on the day, almost 4.9 percent stronger over five sessions and about 12.5 percent higher over the past month. The US Dollar Index traded around 98.65, near three-month lows, while long-term Treasury yields recovered most of their initial losses after the Treasury announcement. Silver climbed toward $70 an ounce, tracking gold's advance.
The immediate test is whether gold can establish itself above $4,600. A sustained break would expose $4,650 and then the $4,900 area, while failure to hold $4,500 would warn the move has become stretched.
Treasury Buybacks Fuel the Move
The rally accelerated after the US Treasury doubled its liquidity-support buybacks for longer-dated government securities to at least $4 billion per operation, effective Sept. 9 and running to Nov. 4. The move initially pulled yields lower and raised fresh questions over how Washington intends to manage pressure at the long end of the curve, with US public debt having surpassed $40 trillion.
Alexander Zumpfe of Heraeus Metals Germany sees a supportive structural backdrop, arguing that "Gold's milestone rally through 2025 has set the stage for a continuation of its bull trend in 2026." His 2026 LBMA forecast range spans $3,450 to $5,200, with an average projection of $4,620.
Technical Levels in Focus
XAU/USD holds a clear bullish bias above the 50-day, 100-day and 200-day simple moving averages, which sit at $4,172, $4,379 and $4,514 respectively. The Relative Strength Index on the daily chart is near 70, flagging overbought conditions, while the Average Directional Index around 32 suggests a moderate trend.
On the topside, immediate resistance emerges at the nearby horizontal level around $4,600, ahead of a higher barrier at $4,750. On the downside, initial support is seen at the 200-day SMA at $4,514, followed by the 100-day SMA at $4,379 and the 50-day SMA at $4,172, before a more distant structural floor at $4,000.
Continued central-bank purchases, particularly from China, and stronger inflows into gold exchange-traded funds keep underlying demand firm. Citigroup's currency strategists have turned more bearish on the dollar, cutting their three-month forecast for the US Dollar Index from 102.12 to 98.34, while Morgan Stanley targets gold above $5,000 in 2027.
This article is for informational purposes only and does not constitute investment advice.
