Gold ended August with over 2% gains, following a test of its 100-day moving average. Buyers have maintained momentum since last year, and there is renewed interest in gold as the new week begins.
Gold has reached its highest level since the end of April, where its previous upward movement paused at $3,500. The ongoing US tariffs situation enhances gold’s appeal as a safe asset during uncertain times.
Factors Affecting Dollar Appeal
US policy uncertainty and inconsistent communication have weakened the dollar’s appeal this year. Additionally, concerns over the Fed’s independence and a lack of confidence in the dollar and US assets contribute to gold’s allure.
Central bank purchases and gold’s role as a hedge against potential stagflation risks further drive its appeal. The April high of $3,500 is a key level to monitor, as breaking it could lead to further gains. Gold’s recent movement has been relatively sideways over the last three months.
With gold gaining over 2% last week and bouncing firmly off its 100-day moving average, the upward momentum we’ve seen since last year is back in play. After months of sideways consolidation, fresh buying is now challenging the highs from April 2025. This renewed vigor suggests that a significant market move could be imminent.
The ongoing uncertainty from US trade policy, highlighted by the latest tariff news over the weekend, continues to weigh on the dollar. The U.S. Dollar Index (DXY) has reflected this sentiment, recently slipping below the 95.00 level for the first time since the first quarter of 2025. This backdrop makes dollar-denominated assets less attractive and pushes capital toward safe havens like gold.
Political and Economic Influenes on Gold
Political pressure on the Federal Reserve is adding to these concerns, undermining confidence in US assets. President Trump’s comments last week questioning the Fed’s rate path ahead of the September FOMC meeting have only amplified this uncertainty. For traders, this political risk is a clear signal to hedge against potential dollar weakness.
The broader macroeconomic environment is also highly supportive for gold. World Gold Council data for Q2 2025 showed that central banks continued their aggressive buying, adding another 250 tonnes to global reserves. This institutional demand provides a strong floor for the price, especially as recent data showing stubborn 4.1% CPI inflation alongside revised Q2 GDP growth of just 0.8% stokes fears of stagflation.
Looking at the derivatives market, we are seeing a significant buildup of open interest in call options with a $3,500 strike price for October 2025 expiration. This indicates that traders are positioning for a breakout above the key resistance level established back in April. A decisive move above this price would likely trigger a wave of further buying.
A sustained break above $3,500 would confirm the end of the three-month consolidation phase and could open the door to a rapid advance. Therefore, traders should watch this level closely, as it represents the primary trigger for new long positions. Any breach would signal that the next leg of the bull market is underway.
