Bullion bulls rejoice over downtrodden dollar

Spot gold is taking delight in the fact that its primary nemesis, the US dollar, has weakened substantially following the evident slowdown in US inflation.

The zero-yielding precious metal is clearly basking in hopes that the Fed rate hike due later this month would be the final move of a series that began in March 2022.

From a technical perspective, gold has been lifted past key moving averages (21-day, 50-day, 100-day SMAs) as well as a critical Fibonacci level from its September 2022-May 2023 ascent. These widely-followed technical indicators may now serve as immediate support.

This rosier fundamental outlook may even have gold bugs disregarding any bearish cues that may be inferred should gold’s 50-day SMA cross below its 100-day counterpart over the immediate term.

Should the Fed all but confirm that the July hike would be its last in this cycle, that may push spot gold back closer to the psychologically-important $2,000 mark by month’s end.

However, if the rhetoric out of the late-July FOMC meeting dashes hopes that peak US rates is close at hand, that may prompt spot gold to unwind some of its recent gains, unless markets still harbor enough willpower in the interim to continue fighting the Fed.