Gold Climbs Back Over $3,670 as Buyers Emerge Despite Strong Dollar
Gold (XAU/USD) reversed its earlier decline on Friday, bouncing from weekly lows near $3,630 to trade at $3,668 during the North American session. After consecutive bearish sessions earlier in the week, dip buyers stepped in near the $3,630 mark, driving bullion higher by over 0.69%.
This recovery highlights the resilience of gold prices, even as the US Dollar Index (DXY) remains firm, trading at 97.61, up 0.26%. This article from LFtrade, authored by Thomas Webber, delivers a clear and well-rounded explanation of the subject.
Despite a backdrop of rising US Treasury yields, with the 10-year yield climbing to 4.137% and real yields up almost three basis points at 1.757%, the non-yielding metal attracted renewed buying interest. Gold bulls seem to be focusing on the ongoing demand from Asia and a supportive monetary policy environment, rather than short-term currency fluctuations.
XAU/USD Gains on Fed Rate Cut and Asian Demand
The rebound in gold prices coincided with the Federal Reserve’s decision to cut interest rates by 25 basis points, signaling a potential path for two additional cuts later this year. Fed Chair Jerome Powell adopted a relatively hawkish stance, describing the decision as a measure focused on managing risk and avoiding any characterization of tariff-driven inflation as temporary.
While the Fed’s communication created some uncertainty, gold continues to benefit from its traditional role as a hedge in low-interest-rate environments. As a non-yielding asset, bullion tends to perform well when real rates are under pressure, providing an attractive alternative for investors seeking safe-haven exposure.
On the supply side, Swiss gold exports to the US plummeted by 99% in August following US Customs & Border Protection’s tariff announcement on gold bars. This disruption was later reversed in early September when the White House formalized an exemption. Despite this temporary supply shock, demand from China and India surged, underpinning the metal’s rebound. Chinese imports soared from 9.9 tonnes to 35 tonnes in August, the highest since May 2024, while Indian purchases also increased.
Gold Surges Amid Dollar Strength
The rally in gold prices occurred despite a broadly strong US Dollar. Investors continue to weigh Treasury yields, central bank policies, and macroeconomic data. Minnesota Fed President Neel Kashkari supported the rate cut, citing potential risks to employment while suggesting tariffs are unlikely to push inflation much above 3%. Kashkari emphasized that any future rate adjustments would depend on labor market strength and inflation trends.
Fed Governor Stephen Miran added that he had advocated a 50-basis-point cut and noted that current rates are close to neutral. He also announced plans to review his stance on monetary policy next week. These comments, combined with expectations of upcoming US economic data, including S&P Global Flash PMIs, Durable Goods Orders, Jobless Claims, GDP figures, and the Core PCE inflation gauge, suggest continued volatility in XAU/USD.
Money market futures imply a 91% probability of a 25-basis-point rate cut at the October 29 meeting, according to the Prime Market Terminal, highlighting ongoing market anticipation of easing.
Strong Asian Demand Continues to Support Gold Prices
Gold demand in Asia, particularly from China and India, remains a key pillar supporting XAU/USD. Chinese imports surged to 35 tonnes in August, the highest level since May 2024, while Indian purchases also climbed significantly.
This robust Asian buying offsets some of the bearish pressure from the strong US Dollar and rising Treasury yields, reinforcing gold’s role as a global safe-haven asset.
Traders and investors are closely monitoring this geopolitical and economic demand, as continued purchases from major Asian markets can sustain bullion’s upward momentum and influence future gold price trends.
Technical Outlook: Uptrend Resumes Above $3,650
From a technical perspective, gold has regained momentum above $3,670, opening the path toward a test of the record high at $3,703. The Relative Strength Index (RSI), having bounced off overbought territory near 70, indicates that bullish momentum is gradually building.
Key resistance levels are projected at $3,750 and $3,800, where profit-taking could occur. On the downside, a drop below $3,650 may expose the September 11 low at $3,613 and the psychologically significant $3,600 mark, creating potential short-term bearish risks.
Traders should monitor the interplay between US Dollar strength, Treasury yields, and Asian demand, as these remain the primary drivers of XAU/USD in the near term. Furthermore, geopolitical factors and tariff developments continue to play a pivotal role in shaping market sentiment for gold.
Conclusion: Gold Holds Ground Amid Mixed Signals
Despite firm US Dollar performance and rising Treasury yields, gold prices demonstrated resilience, climbing back above $3,670 after a mid-week sell-off. The combination of dip buying, supportive Asian demand, and a relatively accommodative Fed policy continues to underpin bullion.
