After having rebounded from a low near the key $1200 support level early last week, gold has been rising in a sharp rally that has been driven in part by relatively sustained pressure on the US dollar. Both this pressure on the dollar and the boost for gold prices have been prompted by uncertainty as to the future path of Federal Reserve monetary policy as well as continued controversies and setbacks within the troubled Trump Administration. For its part, the Fed has become noticeably more dovish than previously, as several Fed speakers, including Chair Janet Yellen, have recently begun to talk down the prospects of regular interest rate hikes going forward.
After a week-long rebound, the price of gold was significantly further boosted on Tuesday as the dollar fell on both US political uncertainty as well as the growing trend of non-US central banks adopting increasingly hawkish stances in contrast with the Fed. Most recently, these hawkish-shifting central banks have included the Bank of Canada and Reserve Bank of Australia.
The resulting surge for gold prompted price to hit a new month-to-date high approaching the key $1250 resistance level. This $1250 price region has served as a major support/resistance pivot level for over a year. While pressure on the dollar that has helped boost gold has been strong of late, dollar-selling appears to have been overdone on a short-term basis. If this is indeed the case, and the dollar stages a relief rebound, the price of gold could potentially turn back down from around the $1250 resistance level. In this event, the near-term downside target remains at the noted $1200 psychological support level.