Gold continues to hold above the psychological mark of $4,200 per ounce. On Monday morning, XAU/USD is trading around $4,215. The metal is supported by several factors at once: large inflows into gold funds, ongoing central bank purchases, and a weaker dollar.
What is happening with the gold price
After consolidating above $4,200, the metal approached the nearest resistance around $4,225. The next larger upper boundary is the $4,400 area. On the downside, the important support zone remains the area around $4,055. Thus, the market is forming a wide range, within which upcoming macroeconomic data could determine the further direction.
What the technical picture shows
The Relative Strength Index (RSI) on the daily chart is around 47.08. A value of 50 is usually considered neutral. The current reading does not indicate pronounced overbought conditions in gold. This means that, from a technical standpoint, the move still has room to continue if fundamental factors support buyers.
Gold ETFs received the largest inflow in four years
One of the main drivers is demand through exchange-traded funds backed by physical gold. Inflows into such instruments reached their highest level in four years. When investors buy shares of physically backed gold ETFs, the funds increase the amount of metal in their reserves. Therefore, inflows into this category create additional real demand for gold.
Central banks continue buying
The second steady source of demand remains central banks. The People's Bank of China increased its gold reserves by about 740 thousand ounces in September. Purchases have continued for 23 months in a row. Such a streak is especially important for the market, since central bank demand is less sensitive to short-term price fluctuations than the positions of speculative traders.
Why a weak dollar helps gold
Additional support for XAU/USD comes from the weakening of the US dollar. Gold is denominated in dollars, so a decline in the US currency makes the metal more affordable for buyers using other currencies. If US bond yields also decline at the same time, gold's attractiveness increases further.
What could change the movement this week
The main events of the week are tied to US statistics. The consumer price index will be released on Wednesday. On Thursday, the market will receive the producer price index and retail sales data. These publications will influence expectations for further Fed policy, bond yields, and the dollar exchange rate. For gold, these are three key variables.
Where the nearest levels are
On the upside, the first reference point remains $4,225. If it consolidates above that, the market may turn its attention to a wider area up to $4,400. On the downside, the important zone remains $4,055. It is the reaction to US inflation that may determine which of these boundaries comes under pressure first.
What's next
Right now, gold's rise is supported not only by speculative demand, but also by more stable flows through ETFs and central banks. However, the coming week depends entirely on US data. If inflation comes in higher than expected and the dollar strengthens again, gold could come under pressure. If the data allow the market to expect a softer rate path, the move above $4,200 could continue.
Did you catch this move to $4,200 on your account?
A strong trend in gold can be read correctly, but the outcome of a trade still depends on the available trading nominal. In prop trading, a trader passes an evaluation and gains access to the company's trading account, working within its risk limits without needing to use comparable personal capital. While gold remains in an active trend, it is better to understand the mechanics before the next major move.