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Gold Prices Try to Reach New Yearly-High as USD Slumps

Gold price chart

Gold prices are on the rise again following a few days of limited price action and moments ago the price reached a fresh weekly high of $1785.46.

Further gains in the XAU/USD, depending on the price taking out the July high of $1789.3. Failure to takeout the high might result in the price returning to its sideways pattern, and trade between the July high and July low of $1757.

Yet, on a successful break to the top, gold prices might start trending again and reach the target of an inverse head and shoulders pattern at $1812, followed by an ascending triangle pattern target of $1850.

These two patterns have been in play for some time, but gold prices have struggled to trade higher, and it might have been because, a majority of retail investors are already long gold, and they tend to be wrong about longer-term trends. Client positioning from large European brokers shows that about 68% of positions are betting on higher prices. Yet, they are winning today.

Soft Dollar Lifts Gold Prices

A weaker dollar spurred today’s move higher in gold prices. The dollar was down by 0.73% against the Euro, and 0.6% against the Aussie dollar and Swiss Franc. Against gold, the USD is down by 0.58%.

Comparing gold to currencies show that it is not risk-off driving gold prices higher; instead, it is the USD selling off, that is helping prices to rise. Stock market futures are also up sharply, ignoring the sharp rise in COVID-19 cases over the last few weeks.

The limited rise in gold prices despite higher Covid-19 cases might suggest that gold to have lost some of its safe-haven appeal.

Instead, it could be the “quantitative easing to infinity,” low-interest rates, and fiscal stimulus that is driving prices higher, the same factor that is underpinning stock market gains.

Daily gold price chart