Gold Rises on Middle East Risk to Three-Month High, Breaks Above $4,600

Spot gold prices rallied firmly, supported by heightened geopolitical risks in the Middle East and a softer U.S. dollar, last trading near $4,620.81 and hitting a three-month high intraday.

**Middle East Tensions and Weak Dollar Provide Dual Support**

Geopolitical uncertainty is the key trigger igniting the latest gold rally. Reports indicate that recent developments in the Middle East, particularly regarding shipping conditions around the Strait of Hormuz, continue to fuel market risk aversion, driving capital into safe-haven assets like gold. Concurrently, a weaker dollar has significantly boosted gold's appeal to holders of other currencies. The dollar's retreat partly stems from market concerns over U.S. fiscal policy; according to MUFG, the dollar's upside potential is limited due to skepticism over related plans.

**Fed Policy Expectation Whipsaw Heightens Market Volatility**

Despite gold's strong performance, the Federal Reserve's monetary policy outlook remains a potential constraint. Market rate expectations have shown notable swings; on one hand, traders have sharply trimmed bets on further rate cuts and increased expectations for a rate hike by the year-end. This hawkish outlook provides some dollar support, potentially capping gold's gains. On the other, data also show that market pricing of a September rate hike has cooled significantly from a prior peak of around 75%. Shifts in rate expectations eased pressure on gold as a non-interest-bearing asset. This tug-of-war in policy expectations means gold, after breaking key resistance, still faces macro-level uncertainty.

**Technical Indicators Suggest Bullish Bias but with Resistance**

Technically, gold's short-term momentum is robust. Market analysis notes that after breaking above the 100-hour simple moving average, more bulls entered the market. , the Moving Average Convergence/Divergence (MACD) indicator remains positive, and the Relative Strength Index (RSI) holds above 60 in a strong zone, indicating bulls control intraday momentum. However, several analysts note that gold encounters resistance near the 38.2% Fibonacci retracement of the decline from prior swing highs, advising traders to wait for more sustained buying signals before confirming a solid floor for prices.