Rania Gule
Gold continues to trade near $3,370 per ounce at the start of the week, under selling pressure driven by a slight rebound in the US dollar and rising risk appetite in global markets. In my view, this decline does not reflect a fundamental weakness in demand for the precious metal as much as it reflects a tense state of anticipation ahead of tomorrow’s highly awaited US inflation data, which will have a direct impact on Federal Reserve monetary policy expectations and, consequently, on gold’s short-term trajectory. Markets tend to close or reduce positions before major data events, especially those directly tied to interest rate decisions.
The continued strength of the US dollar, even if limited, puts pressure on dollar-denominated commodities, including gold, and delays the yellow metal’s ability to hold above the key psychological level of $3,400. On the other hand, market expectations are rising that the Fed will begin a rate-cutting cycle in September, providing fundamental support for prices. In my opinion, this contrast between short-term pressure from the US currency and medium-term support from monetary policy explains the relatively tight range that gold is currently experiencing and makes any strong move dependent on the inflation data.
Statements by Fed Governor Michelle Bowman on the fragility of the US labour market and her support for a scenario of three rate cuts in 2025 served as an additional signal to markets that monetary policy is tilting toward easing. These messages, combined with market pricing of over 89% probability for a September rate cut, strengthen the logic of holding gold as a non-yielding hedge. In my view, the continuation of this tone from Fed officials will undermine any sustained rally in the dollar, potentially giving gold room to test higher levels in the weeks ahead.
Meanwhile, the People’s Bank of China added gold to its reserves for the ninth consecutive month in July, confirming a long-term strategic demand for the precious metal from one of the world’s largest central banks. These purchases are not just a short-term price support factor, but rather a signal that gold retains its role as a store of value amid geopolitical and economic shifts. In my estimation, this institutional long-term demand creates a solid price floor that prevents any sharp collapses even during periods of selling pressure.
It is also notable that trade uncertainty ahead of the deadline for US tariffs on China, as well as the upcoming talks between the US and Russia over Ukraine, adds a layer of geopolitical support for gold. In such open-ended situations, investors hesitate to increase exposure to high-risk assets, opting instead to keep part of their portfolios in safe havens. My view is that these factors, even if not currently at the centre of the economic narrative, act as strong background drivers limiting any sharp declines in gold prices.
At the same time, we cannot ignore that market optimism about improved political relations between Washington and Moscow or the possible extension of the tariff truce with Beijing could temporarily reduce demand for gold. However, I believe any decline caused by improved risk appetite will be limited, given the entrenched market conviction that the Fed is moving toward rate cuts, keeping real yields low and supporting gold.
The US data expected this week—especially tomorrow’s CPI and Thursday’s PPI—will be the real deciding factor for gold’s next direction. If the reading comes in below expectations, it will reinforce rate-cut bets and weaken the dollar, potentially helping gold to break above $3,400 and aim for $3,420 or $3,450 in the short term. Conversely, if the data is unexpectedly strong, it could give the dollar a strong boost and pressure gold back toward the $3,350–$3,360 range, at least temporarily.
In my opinion, the broader picture remains supportive for gold in the second half of 2025, with expectations of continued moderate inflationary pressures, slower US economic growth, and increased central bank gold buying as part of reserve diversification. In the near term, however, gold’s moves will remain tied to US data and the market’s reaction to it. Therefore, any sharp moves in the coming days should be read within the context of interest rate and dollar dynamics, with the awareness that geopolitical and trade factors can suddenly shift overall sentiment.
Based on current conditions, I see the probability of gold rising above $3,400 this week as valid but conditional on a softer US inflation reading. Any successful breakout above this level could support a short-term rally before the market reassesses its stance ahead of the September Fed meeting. On the other hand, the downside scenario will likely remain limited, with difficulty breaking below $3,350 unless we see highly surprising data or a dramatic shift in monetary policy expectations. This combination of factors keeps gold in a zone of “strategic anticipation,” waiting for a spark to set it on a clearer path.
Technical Analysis of Gold ( XAUUSD ) Prices:
The four-hour chart shows that gold (XAU/USD) is moving within a clear ascending channel after rebounding from strong support levels near $3,315–$3,320. Currently, the price is trading near the key support zone S1 at $3,370, which represents the lower boundary of the latest upward wave. Holding above this level keeps the bullish momentum intact, while the main moving average supports the short-term uptrend. The Stochastic indicator is also in oversold territory, which reinforces the likelihood of a bullish rebound in the coming hours.
Image
Image
If the price manages to hold above $3,370 and confirm a bullish breakout above $3,400 (resistance R1), the stronger scenario would be an initial move toward $3,420, followed by the more critical resistance at $3,440 (H1), a strong supply zone that may limit gains in the short term. A decisive close above this zone would further enhance the chances of reaching $3,460, supported by the positive momentum of the ascending channel and sustained expectations of a US interest rate cut.
On the other hand, if the price breaks below $3,370 and holds there, we could see a bearish correction toward support S2 at $3,350, with an extended move to $3,320 (S3) if selling pressure intensifies. However, given the current trend structure and technical indicators, the bullish scenario remains the stronger one, with a preference for looking for buying opportunities from nearby support zones as long as the $3,347–$3,350 level is not broken with a clear close.
Support levels: 3,370 – 3,350 – 3,320
Resistance levels: 3,400 – 3,420 – 3,440
Gule is Senior Market Analyst at XS.com – MENA
