Gold prices are mirroring the reversal patterns observed in Tuesday’s Asian trading, as buyers take a pause early Wednesday following two consecutive days of substantial gains.
In Dubai, gold rates saw significant increases, with 24-carat gold rising AED5.25 to AED414.00 and 22-carat gold gaining AED4.75 to AED383.25. Additionally, 21-carat gold was up AED5.00 to AED367.75, while 18-carat gold rose AED4.25 to AED315.25.
Spot gold climbed to $3,428.84 per ounce by 2:10 p.m. ET (18:10 GMT), reaching its highest level since June 16 (currently trading above $3,423). U.S. gold futures also showed an increase, reaching $3,443.70 (currently trading above $3,437).
Gold prices touched five-week highs of $3,439 this Wednesday before retreating due to profit-taking and a rebound in the U.S. Dollar (USD). Optimism surrounding U.S. trade agreements with Japan and Canada has shifted risk flows back into Asian markets, diminishing the safe-haven appeal of gold while bolstering the USD, especially in light of easing concerns about U.S. economic growth.
President Trump stated early Wednesday that he had just finalized a massive deal with Japan, potentially the largest deal ever made. Japan’s chief trade negotiator, Ryosei Akazawa, confirmed on X, stating, “Mission Complete.” On Tuesday, Canadian Prime Minister Mark Carney remarked, “We’re working positively for a trade deal with Trump.”
Read more: Dubai 24-carat gold price today hits AED408.25 up AED2.75 as dollar and bond yields fall
Gold breaches key Fibonacci level
Despite this positive shift in risk sentiment, investors remain cautious due to the lack of substantial details regarding the U.S.-Japan trade agreement and the upcoming earnings report from American tech giant Alphabet Inc, scheduled for release after the markets close on Wednesday. Additionally, political instability in Japan and uncertainties surrounding a U.S.-EU trade agreement continue to weigh on sentiment, which could limit any downside for gold prices.
A Japanese media outlet, Mainichi, reported on Wednesday that Prime Minister Shigeru Ishiba is expected to resign by the end of August, following the defeat of his ruling Liberal Democratic Party (LDP) in the Upper House election on Sunday.
As we look ahead, trade and political developments will play a crucial role in gold price movements, while traders will also closely monitor the ongoing feud between Trump and U.S. Federal Reserve (Fed) Chairman Jerome Powell.
According to the daily chart, gold prices have successfully breached the 23.6 percent Fibonacci Retracement (Fibo) level of the April record rally at $3,377. The yellow metal maintains its position well above all major Simple Moving Averages (SMA), with the 14-day Relative Strength Index (RSI) remaining comfortably above the midline, despite the recent dip.
Thus, the path of least resistance appears to be upward, with acceptance above the $3,440 static resistance required to challenge the June 16 high of $3,453. A sustained move above that level could ignite a fresh uptrend toward the record high of $3,500.
Gold prices reach five-week high
Gold prices surged to a five-week high on Tuesday, buoyed by trade uncertainties and declining U.S. bond yields, as investors keep an eye on President Trump’s August 1 tariff deadline. Spot gold rose 1 percent to $3,428.84 per ounce by 2:10 p.m. ET (18:10 GMT), marking its highest point since June 16. U.S. gold futures increased by 1.1 percent to $3,443.70. The yield on benchmark U.S. 10-year notes fell to a near two-week low, enhancing the attractiveness of non-yielding bullion.
Treasury Secretary Scott Bessent indicated on Tuesday that he would meet with his Chinese counterpart next week, suggesting a possible extension of the August 12 tariff deadline. He also mentioned that the U.S. is poised to announce “a rash of trade deals” with other countries. Meanwhile, European Union diplomats hinted at broader counter-measures against the U.S. as prospects for a trade agreement dwindle.
Investors are positioning themselves ahead of next week’s Federal Reserve meeting. While the Fed is expected to maintain current interest rates, markets are anticipating a potential rate cut in October. Gold, traditionally viewed as a hedge in uncertain times, tends to perform well in a low-interest rate environment. Bessent also stated on Tuesday that there was no immediate need for Fed Chair Jerome Powell to step down, a day after calling for a review of the central bank as an institution. Furthermore, Fed Vice Chair Michelle Bowman emphasized the importance of the central bank’s independence amid rising pressure from Trump to lower borrowing costs.
