Gold briefly traded above $4,680 a troy ounce on Monday, reaching its highest level since mid-May. The precious metal held on to most of its intraday gains in the American afternoon as the US dollar continued to decline against major currencies. The move comes amid renewed political uncertainty in the world's largest economy, with President Donald Trump pursuing aggressive trade and foreign policy measures.
Dollar weakness underpins gold
The US dollar has come under pressure from two fronts. First, trade talks with Canada collapsed last week, and Trump has threatened massive tariffs on Canadian steel and automotive imports. Prime Minister Mark Carney said the US made disproportionate demands at the last minute. Second, US Treasury Secretary Scott Bessent is due to hold a press conference detailing sanctions against countries or companies that trade with Iran, following Trump's announcement that the next step in the Middle East conflict would be to choke Iran financially.
While Trump's threats have often lost their impact in financial markets — given a pattern of backing down — the current round of remarks is having a noticeable negative effect on the greenback. Investors are pricing in adverse economic consequences for the US, which in turn supports gold as an alternative store of value. Additionally, a failed bond market intervention by the US Treasury has raised concerns about fiscal sustainability, further boosting demand for bullion.
Technical outlook remains bullish
From a technical perspective, the near-term bias for XAU/USD is firmly bullish. On the four-hour chart, the price holds well above the 20-period simple moving average (SMA) at $4,573.09, as well as the longer-term 100- and 200-period SMAs at $4,350.49 and $4,204.36. The alignment of these averages confirms a strong uptrend. The Relative Strength Index (RSI) points north at 76, still well short of signalling exhaustion, while the Momentum indicator remains comfortably above its midline despite a slight turn lower alongside a minor retracement.
The daily chart reinforces the bullish picture. The 100-day and 200-day SMAs at $4,379.83 and $4,516.97 sit well below the current spot price, indicating a solid underlying trend. The 20-day SMA at $4,307.69 highlights how far the latest push has extended from the short-term mean. Technical indicators maintain their upward trajectory above their midlines, suggesting the uptrend has plenty of room to run.
Key levels to watch
On the downside, initial support is seen at $4,573.09, where the 20-period SMA converges. Below that, the $4,500 round number offers a next line of defence. A deeper structural cushion lies at the 100-period SMA near $4,350.49 and the 200-period SMA at $4,204.36 if selling pressure intensifies.
Immediate resistance is at $4,700, followed by the $4,730 area. If gold clears that zone, the path towards $4,800 becomes clearer. Given the current momentum, bulls will likely test these levels in the coming sessions. For the latest movements, keep an eye on the live gold price.
Key takeaways
- Gold reached $4,680 on Monday, its highest since mid-May, driven by US dollar weakness.
- Political turmoil from tariff threats on Canada and new Iran sanctions is weighing on the greenback.
- Technical indicators on both the four-hour and daily charts point to a sustained bullish trend.
- Key support sits at $4,573 and $4,500; resistance lies at $4,700 and $4,730.
Common questions
What is driving gold's price higher?
The US dollar is falling due to political uncertainty, including tariff threats against Canada and sanctions on Iran. This boosts demand for gold as a safe-haven asset. Technical indicators also support the uptrend, with moving averages aligned bullishly and the RSI showing no signs of exhaustion.
The combination of fiscal concerns and a weaker dollar creates a favourable environment for gold. However, as always, markets can shift quickly, and sustained gains will depend on how the political situation evolves.