Gold holds near record highs as demand sustains rally

Gold traded around 3,760 USD per ounce on Wednesday, hovering near the record high established the previous day. The market continued to digest commentary from Federal Reserve officials, including Chair Jerome Powell.

Powell acknowledged the Fed's challenging position, citing a combination of accelerating inflation and sluggish employment growth, which together heighten risks for the labour market. While he expressed satisfaction with the current policy trajectory, he left the door open for further interest rate cuts if warranted by economic conditions.

Market pricing in futures contracts indicates expectations for two additional 25-basis-point cuts this year, potentially in October and December. Investor focus now shifts to the upcoming release of the August PCE index – the Fed's preferred inflation gauge – as well as scheduled speeches from other Fed officials.

Geopolitical tensions are providing additional support for the precious metal. NATO's recent warning that it is prepared to deploy all necessary measures, both military and non-military, in its defence has bolstered gold's appeal as a safe-haven asset.

Technical analysis: XAU/USD

H4 Chart:

On the H4 chart, XAU/USD formed a tight consolidation range around 3,734 USD before breaking upwards to complete an upward move towards 3,790 USD. Following a correction to 3,750 USD, a new upward impulse has begun. The immediate focus is now on a break above the 3,790 USD level, which could open the path for a continuation towards 3,840 USD, with a longer-term prospect of reaching 3,878 USD. This bullish scenario is technically confirmed by the MACD indicator, whose signal line is well above the zero line and trending higher.

H1 Chart:

The H1 chart shows the pair consolidating around 3,717 USD before initiating an upward move targeting 3,808 USD. Upon reaching this level, a corrective pullback towards 3,730 USD is possible. Following this, a resumption of the uptrend towards at least 3,820 USD is anticipated. This outlook is supported by the Stochastic oscillator, with its signal line currently above 50 and rising sharply towards 80.

Conclusion

Gold remains well-supported fundamentally by a dovish-leaning Fed and geopolitical risks, while the technical picture suggests the bullish momentum is intact. A sustained break above the immediate resistance could trigger the next leg higher towards fresh record levels.