Gold set to regain momentum after short-term correction

After finding a local low on August 19, the gold market is advancing, opening Monday's trading session at $3,365.49. Although the overall trend shows signs of continuation, the pace of growth is slowing down, with short-term exhaustion setting in.

On the daily chart, the Stochastic Oscillator (5, 3, 3, Simple) is at 68 and approaching the overbought zone. The %K line is leading the %D line upward, creating a bullish impulse that indicates strong buyer activity. This supports a continued upward move, particularly if the price holds above $3,370. However, a correction may be brought into play upon reaching the 80 level.

The 4-hour chart, on the other hand, paints a more cautious picture. The Stochastic Oscillator has already entered the overbought territory and is starting to turn down. This follows a sharp rebound from an oversold state below 20. Convergence or a bearish crossover of the %K and %D lines would signal weakening momentum and the potential for a short-term pullback.

A policy shift by the Federal Reserve in September is likely to provide fundamental support for gold. Markets are pricing in the first interest rate cut next month following an extended period of monetary tightening. This prospect is weakening the US dollar. The decline in the greenback's value makes gold more appealing for international investors and strengthens its role as a hedge against persistent inflation and global uncertainty, therefore creating a favorable environment for the precious metal's ongoing uptrend.

Take into account the following trading strategy:

Buy gold at the current price or during a short-term correction. Take profit: $3430.00. Stop loss: $3316.36.

This forecast is relevant from August 25 till September 1, 2025.