Gold rises to new highs on rising demand from China, weaker dollar

• Gold expands to new all-time highs on news of rising Chinese demand.
• A weaker US dollar propels the precious metal further higher.
• Middle East peace talks have reached an impasse, further increasing geopolitical risk.

Gold (XAU/USD) is trading to a new all-time high in the $2,520s on Tuesday amid news of solid demand from China, a weakening US dollar (where the precious metal is largely priced) and ongoing geopolitics. risks emanating from the Middle East, where peace negotiations risk failure.

Gold to new high after news of Chinese demand

Gold continues to rise on Tuesday amid increased haven demand from China. The People’s Bank of China (PBoC) issued new gold import quotas to banks which “triggered speculation of a renewed wave of demand”, according to broker SP Angel. Safe-haven demand for gold in China increased after yields on 10-year Chinese government bonds fell to record lows last week and as a result “Chinese buyers are looking for alternative protection, with gold an obvious candidate,” the broker added. .

Gold earns fresh gains as the US dollar hits a new eight-month low on Tuesday. The US dollar index (DXY) fell to 101.76 in early trade – a positive for gold as the two assets are highly negatively correlated.

Gold may be granted asylum after an attempt to reach a Middle East peace deal, led by US Secretary of State Antony Blinken, has stalled with Israel ready to agree, but Hamas not because it wants that the agreement includes a permanent agreement and not. a temporary ceasefire as provided for in the current agreement. Hamas further escalated tensions by recently acknowledging a suicide bombing in Tel Aviv. An all-out Iranian attack against Israel also remains a general risk factor.

Technical Analysis: Gold is moving up towards the breakout target

Gold (XAU/USD) is extending to new all-time highs after breaking out of a range it has been stuck in since July. It is on its way to the initial breakout target at $2,550, calculated by taking the 0.618 Fibonacci ratio of the range height and extrapolating it higher.

XAU/USD 4 Hour Chart

Gold is back in the overbought region of the Relative Strength Index (RSI), indicating a pullback risk. This could drag the price of gold down before it goes up. Such a pullback is expected to correct to support around $2,500.

However, gold is in an uptrend in the short, medium and long term, and given that “the trend is your friend”, this uptrend is more likely to continue.