On August 18, our Monday assessment noted that after last week's rally met resistance, gold's short-term upward momentum had moderated. However, the pullback remained limited, with prices oscillating in a range. We advised monitoring support at $4,370, followed by $4,348 and $4,310, while resistance was seen at $4,400, then $4,450 and $4,500.

During Monday's Asian session, gold dipped to $4,367 before quickly finding footing and rebounding to a high of $4,416. After retreating to $4,387, prices bounced to $4,411 but met resistance. In the U.S. session, gold stabilized at $4,377, rallied to $4,428 before facing headwinds, and settled near $4,398. Currently, the metal trades around $4,416.

Overall, gold found support near our $4,370 level and advanced, marking a second consecutive day of gains. The metal continues to trade in a high-level range, with potential for an upward breakout.

Where the market stands

A Wolfinance star-rated analyst noted that after hitting a one-week low, gold has rebounded for two straight sessions, reclaiming the $4,400 mark. Cooling expectations for a Federal Reserve rate hike have weighed on the U.S. dollar, which slid to a two-month low, providing the primary support for gold prices.

Recent U.S. economic data have consistently missed expectations. Both CPI and PPI readings declined, retail sales underperformed, and July non-farm payroll growth slowed. While recurring Middle East tensions keep the risk of oil-driven inflation alive, preventing markets from fully ruling out a rate hike later this year, the data have significantly dampened expectations for a September move. The probability of the Fed holding rates steady has climbed from 48% a week ago to 70%, offering crucial support for gold.

Technical outlook

On the daily chart, gold has bounced from its one-week low and remains in a high-level range, suggesting further upside potential. Immediate support lies at the 4-hour Bollinger Band middle line around $4,380, which coincides with the weekly band's midpoint—a level where prices firmed during Monday's U.S. session. Additional support is seen near the daily 10-day moving average at $4,350. On the upside, resistance is noted at last week's high of $4,450, with a break potentially opening the door to $4,500.

After a period of band expansion, the lower Bollinger Band has turned upward, tracking the middle and upper bands. Following a brief overbought correction, the upper band is opening room for gains. The 5-day moving average shows a bullish crossover, the MACD indicator is trending higher, and while KDJ and RSI indicators show slight downward turns after their own crossovers, the near-term technical picture favors buyers, keeping the possibility of another push higher alive.

Trading strategy

For the session, gold's rally is underpinned by fading Fed rate hike expectations and a weaker dollar. We recommend a range-bound approach: watch support at $4,380 and $4,350, with resistance at $4,450 and $4,500.