$4,500 about to give up: Why Gold can reconquer its safe-haven status

XAU/USD Current Price: $4,488

• The US Dollar came under pressure after the US Treasury Department announcement.
• XAU/USD trades with a firmer tone on Wednesday, aiming to extend gains beyond $4,500.

The US Dollar (USD) is under strong selling pressure on Wednesday, resulting in Gold approaching the $4,500 mark for the first time in over two months. The Greenback came under strong selling pressure after long-term United States (US) government bond yields retreated sharply from their recent multi-year peaks.

Yields on the 10-year and 30-year Treasuries retreated after the US Department of the Treasury announced it will increase the size of government debt repurchases by at least double. According to the press release, the current maximum size of $2 billion per operation will increase to at least $4 billion per operation, and the change will take effect September 9.

The decision clearly reflects that the administration is uncomfortable with rising long-end yields and would prefer to contain that particular end of the yield curve. But it also affects the Federal Reserve (Fed) future monetary policy decisions. The US Treasury will have to issue more bills to finance the planned removal, which could ease financial conditions. Would the Fed need to tighten? Probably.

In any case, that means further USD weakness in a risk-averse environment. The war in the Middle East is at a stalemate, and neither side is willing to budge. Oil prices have already picked up a bullish pace, and it won’t take much longer until energy prices become embedded inflation.

XAU/USD Technical Outlook:

With that in mind, XAU/USD is likely to conquer the $4,500 threshold and advance beyond it.

On the four-hour chart, XAU/USD trades with a clear bullish tone, holding well above the 20-period Simple Moving Average (SMA) at $4,394.04, while the 100-period and 200-period SMAs advance to $4,251.58 and $4,160.33, respectively, reinforcing a firmly upward-sloping trend structure. Momentum stays strong, with the 14-period Momentum indicator holding well above its midline and the Relative Strength Index (RSI) indicator near 68, hinting at persistent buying pressure.

In the daily chart, XAU/USD is also bullish. Spot price remains above both the 100-day SMA at $4,382.54 and the 20-day SMA at $4,225.93, keeping the broader uptrend supported despite being capped by the 200-day SMA at $4,510.34, which is now the immediate relevant resistance level. Strong momentum readings reinforce this constructive tone, with the RSI indicator hovering near 66 in bullish territory and the Momentum indicator firmly positive, suggesting buyers still control the near-term direction.

On the downside, initial support emerges at the short-term 20-period SMA around $4,394, ahead of deeper trend support at the 100-period SMA near $4,252 and the longer-term 200-period SMA close to $4,160. As long as XAU/USD holds above these clustered moving-average supports, the path of least resistance remains to the upside, with any corrective pullbacks likely to be treated as a pause within the broader bullish sequence rather than a trend reversal. On the topside, immediate resistance is defined by the 200-day SMA at $4,510.34, where a decisive break would open the way for a continuation of the advance toward higher cycle highs.

(The technical analysis of this story was written with the help of an AI tool. Know more.)