Gold rebounded sharply Friday after hitting a fresh weekly low of $4,311 earlier in the session, capitalizing on renewed US Dollar weakness as Federal Reserve rate hike expectations continue to fade. The precious metal reversed its initial negative trajectory as traders accelerated Dollar selling, providing critical support for XAU/USD amid shifting monetary policy sentiment.
The turnaround reflects growing market conviction that the Fed’s tightening cycle may be nearing its end, reducing opportunity costs for holding non-yielding assets like gold. Dollar weakness typically boosts gold’s appeal for international buyers while making the commodity relatively cheaper in other currencies. This dynamic is driving increased positioning in precious metals as traders reassess the interest rate outlook.
The recovery comes at a pivotal moment for gold bulls who are defending key technical levels after recent pressure. Market participants are closely monitoring Fed commentary and upcoming economic data for confirmation of the dovish pivot.
FXnCO Insight
Traders should watch for sustained breaks above Friday’s recovery highs as confirmation of a potential trend reversal in gold, particularly if Dollar selling accelerates into next week.
Source: FXStreet