Gold prices started the week lower, pulling back from recent highs as the US Dollar recovered some ground against a modest rise in Treasury yields. But the negative for the precious metal seems to be in short supply given rising market hopes for a September Federal Reserve rate cut, political tension over the Fed’s independence, and rising geopolitical tensions following the deployment of US nuclear submarines off Russia. All this continues to support gold’s status as a safe-haven asset, and the overall outlook remains cautiously bullish even with short-term ups and downs.
KEY LOOKOUTS
• Ongoing speculation of a rate cut continues to limit USD strength and underpins gold prices.
• Deployment of US nuclear submarines off Russia increases safe-haven demand in the face of increasing global uncertainty.
• Deterioration in weaker-than-expected Nonfarm Payroll numbers and revisions signal a slowing economy, supporting gold.
• Look for support at $3,300 and resistance at $3,370–$3,400 for possible breakout or pullback signals.
Gold prices fell slightly at the beginning of the week as reduced Treasury yield pressures allowed the US Dollar to recover some ground. This slight fall aside, the forward-looking precious metal continues to be supported by increasing anticipation of a Federal Reserve rate cut in September, which has moderated wider USD advances. Further, geopolitical uncertainties—specifically the deployment of US nuclear submarines off Russia—are also lending additional support to gold’s safe-haven status. Traders are now looking to future US economic data and risk sentiment for guidance on the next move for XAU/USD.
Gold price inches lower on modest USD strength but is underpinned by expectations of Fed rate cuts and elevated geopolitical tensions. Market attention now turns to release of US economic data and overall risk appetite for further guidance.
• Gold price retreated from more than one-week high at $3,369 on fresh USD buying.
• Modest recovery in US Treasury yields underpinned the US Dollar, driving gold prices lower.
• September Fed rate cut hopes remain to cap non-yielding gold’s downside.
• Soft US jobs data, including below-forecast Nonfarm Payrolls, fueled rate cut expectations.
• Political tension surrounding the independence of the Fed is suppressing aggressive USD rebound.
• Geopolitical concerns escalated after the US sent nuclear submarines to the vicinity of Russia.
• Technical support remains at $3,300, and a breach above $3,370 may lead to $3,400+.
Gold still draws the interest of investors amidst a complicated combination of economic and geopolitical events. Although the metal started the week weaker, its long-term attraction is firm because market belief is increasingly building that the Federal Reserve is moving towards the start of a rate-cutting cycle, perhaps in September. The latest US jobs report, which recorded a significant slowdown in job recruitment and a rise in unemployment, has added to the perception that the US economy is slowing. This supports the case for softer interest rates, which have traditionally helped gold since it does not pay interest and tends to thrive in low-rate conditions.
XAU/USD DAILY PRICE CHART
SOURCE: TradingView
Meanwhile, political uncertainty is growing. The impromptu removal of the head of the Bureau of Labor Statistics by President Trump and the resignation of a Federal Reserve governor have spooked the market with fears over the independence of the Fed. The incidents raise the wariness of investors and improve the attraction of safe-haven instruments such as gold. Geopolitical tensions also continue to mount, with the deployment of US nuclear submarines off Russia in response to aggressive rhetoric, adding further to concerns of international instability. These considerations together create a solid fundamental underpin for gold over the coming weeks.
TECHNICAL ANALYSIS
Gold broke above the resistance level of $3,335 recently and also above the 100-period Simple Moving Average (SMA) on the 4-hour chart, reflecting short-term bullish momentum. Oscillators are becoming positively more bullish, indicating ongoing dip-buying interest near support levels. Primary support now resides in the vicinity of $3,340–$3,338, with additional buying anticipated near $3,320 if that does come under test. On the positive side, a continued move through the new high of $3,369–$3,370 would seal the bullish trend and leave the way open toward the psychological $3,400 level, potentially retesting the all-time high around $3,500 if support persists.
FORECAST
If positive sentiment prevails, fueled by a hoped-for September Fed rate cut and increased geopolitical tensions, gold might reattack the $3,370 resistance level. A breach above this region may trigger a retest of the $3,400 psychological level. Continued buying and positive risk-off sentiment might even propel the metal to the $3,434–$3,435 obstacle, and ultimately, a retest of the all-time high around $3,500 is still in play if uncertainty in the world continues.
Conversely, if the US Dollar continues to appreciate further based on more robust-than-expected economic data or a more aggressive Fed stance, gold could experience selling pressure. Support begins around the $3,340–$3,338 area, which lines up with the 100-period SMA. A firm break below this zone could set further losses in motion towards $3,320, and sustained losses might take the price towards the make-or-break $3,300 level. A violation of this mark could turn momentum in the bears’ direction.
