Gold finished August with over 2% gains, bouncing off its 100-day moving average. Buyer interest has picked up since last year, and gold’s appeal is on the rise as a new week starts. Gold has reached its highest point since late April, where it paused around $3,500. The current US tariffs situation makes gold an attractive safe asset during uncertain times.

Factors Affecting Dollar Appeal

US policy uncertainty and mixed messages have made the dollar less attractive this year. Concerns about the Federal Reserve’s independence and low confidence in the dollar also boost gold’s appeal. Central banks are buying gold, viewing it as a hedge against potential stagflation risks. The $3,500 mark from April is important to watch, as breaking through it could lead to even more gains. Gold’s movement has generally been sideways over the last three months. With a more than 2% gain last week and a solid bounce off the 100-day moving average, the upward momentum that began last year is continuing. After months of sideways movement, new buying is now challenging the highs from April 2025. This energy hints that a significant market move may be close. The continued uncertainty from US trade policy, especially recent tariff news over the weekend, is putting pressure on the dollar. The U.S. Dollar Index (DXY) has dropped below 95.00 for the first time since early 2025. This situation makes dollar-backed assets less appealing, directing investment toward safe havens like gold.

Political and Economic Influences on Gold

Political pressure on the Federal Reserve adds to these worries, lowering confidence in US assets. President Trump’s recent comments questioning the Fed’s future rate decisions before the September FOMC meeting have only increased this uncertainty. For traders, this political risk signals a need to protect against potential dollar weakness. The overall economic environment is also favorable for gold. Data from the World Gold Council for Q2 2025 showed that central banks kept buying aggressively, adding another 250 tonnes to global reserves. This demand from institutions provides a strong support level for gold prices, especially with inflation holding at 4.1% and revised Q2 GDP growth at just 0.8%, fueling stagflation fears. In the derivatives market, open interest in call options with a $3,500 strike price for October 2025 is rising. This suggests that traders are preparing for a breakout above the key resistance level set in April. A clear move above this price could trigger a wave of new buying. A sustained break above $3,500 would confirm the end of a three-month period of sideways movement and may allow for a quick surge in price. Traders should keep a close eye on this level, as it signifies a key point for new long positions. Any breach could indicate that a new phase of the bull market is beginning. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now