Gold delivered one of its strongest moves in recent months. During the August 5 trading session, XAUUSD gained about 4.4% and climbed above $4,250 per ounce — reaching its highest level in roughly seven weeks. The rally was especially notable after several months of decline. As recently as August 3, gold was trading near $4,030, meaning its value increased by more than 5% in just a few sessions!
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Factors behind XAUUSD growth:
Weaker dollar. The decline of the U.S. currency made gold cheaper for buyers from other countries and supported demand. At the same time, falling government bond yields reduced the advantage of interest-bearing assets over gold, which does not generate income on its own.
Weak U.S. data. The private sector created fewer jobs than expected. After the data release, the probability of a Fed rate hike in September dropped from around 67% to 55%, providing an additional reason to buy gold.
Falling oil prices. Talks between Iran and Oman increased hopes for restoring shipping through the Strait of Hormuz. Lower oil prices could ease inflationary pressure and reduce the need for further interest rate hikes.
Return of buyers. Holding the key psychological level of $4,000 attracted traders expecting a rebound after a prolonged correction. Accelerating growth forced the closure of short positions, further strengthening the upward momentum.
Despite the sharp jump, gold is still trading well below its January all-time high. Therefore, the current move could mark either the beginning of a new recovery phase or a short-term reaction to shifting expectations regarding Fed policy.
According to FreshForex analysts, a move above $4,300 will confirm buyer strength and open the way for further growth, making current levels potentially attractive for buying gold. A drop back below $4,100 would weaken this scenario and indicate fading upward momentum.
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