Gold continues to oscillate and consolidate near its recent record high of around $2500 per ounce, but its upward momentum is at risk due to the US dollar appearing oversold. However, a market analyst suggests that investors should pay attention to another gold/currency crossover to determine the true trend of precious metals.

Nicky Shiels, head of research and metal strategy at MKS PAMP, stated in her latest report that she is more concerned about the performance of gold against the euro as its trading approaches historical highs. She pointed out that XAU/EUR is a good representative of "pure gold" demand because it eliminates the widespread volatility of the US dollar.

Despite the US gold futures market being closed for the long Labor Day weekend, spot gold trading against global currencies is still ongoing. The trading of gold against the euro remains in the neutral zone and remains largely unchanged.

Shiels warns that gold trading against the euro is at a critical resistance level, which could lay the foundation for a broader trend.

Since its significant breakthrough in March and April this year, XAU/EUR has been steadily operating within a range of approximately 150 euros per ounce, "Shiels said in her report. XAU/EUR is at the very top of the high 2200 euro/ounce range; there have been six failed attempts in the 2270-2280 euro/ounce range since the April high and the euro's all-time high of 2287 euros/ounce

Although gold failed to break through its March/April high, Shiels pointed out that precious metals seem to have established a solid foundation around 2200 euros per ounce. She stated that even though the price is consolidating, gold still maintains an upward bias against the euro. She added that in this environment, investors should consider buying during a pullback.

The current timing is somewhat suitable for re rating (up or down) - it has been six months since the breakthrough in March, but we believe that the peak has not yet arrived. As a representative of real demand, XAU/EUR still has' momentum ', and it is not yet suitable to reverse the long-term trend in this environment. Of course, there will be tactical reversals, but it's too early to judge the top of gold at $2500/2300 euros, "she said in the report.

Over the past month, as the market prepares to welcome the Federal Reserve's highly anticipated easing cycle, the gold market has established widespread bullish sentiment. The market's expectation of a 25 basis point rate hike and a gradual possibility of a 50 basis point rate cut has pushed up the price of gold to over $2500 per ounce.

The expectation of radical easing led to a significant sell-off of the US dollar; However, many analysts say that a 50 basis point adjustment is unlikely, which could provide some support for the US dollar in the short term.

At the same time, gold remains supported under euro pricing. The market expects the European Central Bank to cut interest rates again in September as inflationary pressures continue to ease.