Gold rises as speculation of Yen intervention weighs on the US Dollar

On Wednesday, the price of gold surged more than 1% as the US dollar weakened due to speculation of a potential Japanese Yen intervention in the foreign exchange market. Simultaneously, US Treasury yields remained steady after releasing weak US job data, which indicated that private-sector hiring in August was weaker than expected.

The Japanese Yen strengthened across the board, leading to the assumption that Japanese authorities might have intervened in the foreign exchange market or executed a rate check. However, no official confirmation of either action was provided.

The gold price remained at $4,373, clearing the 100-day Simple Moving Average (SMA) at $4,361. Despite this positive movement, which could potentially lead to further gains, short-term momentum remained bearish. The Relative Strength Index (RSI) was below its neutral level of 50, indicating that sellers were in control, suggesting that the price of gold might continue to decline.

The next support level for gold was identified as $4,300, and once breached, it could potentially move towards the 50-day SMA at $4,223. If the price of gold fell further, the next area of concern would be the $4,200 level.

On the upside, if gold prices rose above $4,400, it could pave the way to challenge the $4,450 mark before reaching the $4,500 level. A decisive breakout above these levels would expose the 200-day SMA at $4,531 and eventually push the price towards $4,600. Gold has historically been viewed as a store of value, a medium of exchange, and a safe-haven asset during turbulent times, making it a popular investment option.

Central banks are the largest holders of gold, often adding to their reserves to strengthen their currencies and economies during uncertain periods. In 2022, central banks increased their gold holdings by 1,136 tonnes, which is the highest yearly purchase since records began.