Gold climbs as Yen-led US Dollar decline outweighs hawkish Fed expectations

Gold prices have risen on Thursday as the Japanese Yen strengthened, pushing the US Dollar lower and supporting the precious metal. Currently, XAU/USD is trading around $4,425, marking a 0.87% increase for the day. The Yen's upward trend has continued for two days in a row, with USD/JPY falling nearly 1% on Wednesday and currently at around 156.35, its lowest level since August 3.

This sharp move has sparked speculation about further currency intervention or a rate check from Japanese authorities, but no confirmation has been given. The US Dollar Index (DXY), which measures the Greenback's value against six major currencies, is at around 99.26, near a one-week low, after climbing to 99.86 on Wednesday, its highest level since August 14.

Although a weaker US Dollar is typically favorable for Gold, other factors may hinder a significant recovery in the yellow metal. Near-term challenges include high government bond yields, surging oil prices due to the Middle East conflict, and hawkish Federal Reserve expectations. Traders are pricing a 60% chance of a September Fed rate hike, which could make it tough for Gold to attract strong buying interest.

Investors may also be cautious ahead of the upcoming US Nonfarm Payrolls report on Friday, which could impact Fed policy expectations. However, Gold is currently above key moving averages, indicating a positive near-term outlook. The Relative Strength Index (RSI) on the daily chart is around 52, suggesting neutral momentum, while the Moving Average Convergence Divergence (MACD) shows negative territory, hinting at potential choppy recovery attempts.

Immediate resistance for XAU/USD is at $4,450, followed by the 200-day SMA at $4,533 and the $4,700 level. On the downside, the psychological level of $4,400 provides initial support, followed by the 100-day SMA at $4,357 and the 50-day SMA at $4,231. A more substantial decline might bring the horizontal support level of $4,000 into play.