Gold prices (XAU/USD) climbed to approximately $4,520 during the early Asian session on Thursday. The precious metal has reached its highest levels since early June, driven by a weakening US Dollar (USD) following intervention from the US Treasury Department to stabilize bond markets.
The Treasury Department is currently expanding its buyback program for longer-dated securities to mitigate long-term borrowing costs that have reached multi-year highs. Analysts at TD Securities suggest this move has provided a significant boost to metals; they anticipate that gold investment could quickly resurge due to the combination of Treasury liquidity support, a Federal Reserve prepared to tolerate energy-driven shocks, and a growing stagflation narrative, all of which point toward lower real interest rates.
Recent Federal Reserve meeting minutes from July revealed that many policymakers remain prepared to implement rate hikes if inflation fails to decline. While the Fed maintained the Federal Funds Rate within a 3.5%-3.75% range last month, some members expressed a need for prompt action to meet inflation targets.
Despite this, market participants are largely focused on rising stagflation concerns and potential energy shocks, which are driving capital back into gold as a primary safe-haven asset.
Gold Upside Potential Anticipated as Treasury Support Points Toward Lower Real Rates
According to TD Securities, the recent pause in gold’s aggressive upward momentum may be temporary. The bank argues that capital flows could return rapidly, fueled by Treasury liquidity support, the Fed’s tolerance regarding energy-driven inflation, and rising stagflation fears—factors that collectively favor lower real rates and benefit precious metals.
Technical Analysis: Gold Maintains Short-Term Uptrend
On the daily chart, XAU/USD exhibits a bullish near-term bias, maintaining strong positions above both the 20-period Bollinger simple moving average and the 100-day simple moving average (SMA), which preserves the established uptrend. While price is testing the upper Bollinger band, the Relative Strength Index (14) stands at approximately 67, suggesting overbought conditions that may limit immediate gains even as momentum remains positive.
Regarding resistance levels, the upper Bollinger band near $4,550 serves as the initial target; a decisive daily close above this level could trigger a move toward new record highs. On the support side, immediate floor levels are identified at the 100-day SMA near $4,380, followed by the mid-Bollinger band at $4,225, and the lower Bollinger band at $3,905, which represents a significant structural support level in a deeper correction.
