Gold Price Surges 4.5% in a Day…Market Cap Swells by $1.3 Trillion

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Gold prices surged to a 6-week high, increasing its market capitalization by $1.3 trillion in a single day. The resumption of peace talks between the U.S. and Iran pushed down oil prices and inflation outlooks, providing strong upward momentum to the gold market.

According to cryptocurrency media outlet Watcher.Guru on August 6 (local time), gold prices surged 4.5% to $4,255 during intraday trading as of 11:30 AM New York time. Gold's market capitalization expanded to $30.02 trillion. A year ago, gold was priced at $3,376.72 per ounce, and it has risen by 24.20% over the past 12 months.

As the U.S. and Iran showed progress in negotiations for reopening the Strait of Hormuz, international oil prices declined, and inflation expectations eased. According to data from the U.S. Chicago Mercantile Exchange (CME) FedWatch, cited by CNBC, the market's expected number of U.S. Federal Reserve interest rate hikes by year-end decreased from two to one. Spot gold XAU/USD rose 1.3% to $4,127.04, and the U.S. Dollar Index (DXY) fell to around 99.70.

The day's rally was assessed as the strongest market reaction in about a month. Gold prices broke through the upper limit of the existing range at $4,203 and also surpassed the bottom of the daily Ichimoku Cloud, which thickens as it declines, creating a bullish signal. However, there was a possibility that the upward trend could face resistance around the $4,200 mark due to profit-taking by some investors.

Even if a correction occurs, the bullish trend can regain strength only if it holds the $4,166 level. This price represents the 23.6% Fibonacci retracement level based on the decline from $4,889 to $3,942. Currently, gold prices are 23.44% lower than their 52-week high and 26.52% higher than their low. The media reported that if peace talks between the U.S. and Iran continue and steady funds flow into gold-backed exchange-traded funds (ETFs), gold prices could gradually recover towards their one-year high.

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