Gold "interest rate cut expectations" VS "dollar rebound": 3360 is a key watershed, breaking it will trigger a $30 blitz
2025-08-04 17:56:22
On Monday (August 4th) Beijing time, spot gold (XAU/USD) was quoted at $3,358.79 per ounce, down 0.13% on the day, signaling cautious trading sentiment at the start of the new week. Gold prices surged to a one-week high late last week, influenced by last Friday's weak US non-farm payroll data. However, a slight rebound in the US dollar and a modest rise in US Treasury yields put pressure on gold prices, preventing them from maintaining their upward momentum. Nevertheless, heightened geopolitical risks and weakening global risk appetite provided support for gold, limiting its downside potential. This article will combine fundamentals and technical analysis to provide an in-depth analysis of the latest gold market developments and provide a perspective on future trends.
Last Friday's release of the US non-farm payroll data for July captured market attention. The report showed only 73,000 new jobs, well below market expectations of 110,000. Data for May and June were revised downward, further highlighting signs of a cooling US labor market. The unemployment rate edged up to 4.2% from 4.1% in June, while the labor force participation rate fell to 62.2% from 62.3%. While the annual average hourly wage rate rose from 3.8% to 3.9%, indicating continued wage pressure, the overall weak data reinforced market expectations for a September Fed rate cut. Analysts from leading institutions noted that market bets on a September Fed rate cut are now near 100%, potentially positive for non-yielding gold.
However, the US dollar hasn't weakened significantly due to expectations of a rate cut. The US dollar index rebounded slightly today, supported by a modest rebound in US Treasury yields, partially offsetting last Friday's decline. Some traders believe the dollar's short-term rebound may be driven by short-covering, but given the impending Fed rate cut cycle, the dollar's upside potential is limited. This dollar trend has put some pressure on gold prices, but it hasn't triggered a sustained sell-off.
Geopolitical factors also provided support for gold. The ongoing tensions between Russia and Ukraine, along with Trump's recent tough stance against Russia, have further exacerbated risk aversion in the market. Trump reportedly ordered the deployment of two nuclear submarines to waters near Russia in response to provocative remarks by a former Russian official. This geopolitical uncertainty has fueled demand for gold as a safe haven. Furthermore, Trump's tariff rhetoric has stoked market concerns about a deteriorating global trade environment, prompting some investors to turn to gold as a hedge. A senior trader commented, "Gold's safe-haven properties will be difficult to replace in the short term, compounded by geopolitical risks and trade uncertainty."
Internal developments within the Federal Reserve are also adding uncertainty to the market. The resignation of Fed Board member Adriana Kugler and Trump's direct intervention in the head of the Bureau of Labor Statistics have raised concerns about the Fed's independence. Some traders suggest that this political pressure could limit the Fed's policy flexibility, leading to complex implications for the US dollar and gold prices. Despite this, the market generally believes that the Fed's path to rate cuts is relatively clear, providing support for gold's medium- to long-term outlook.
From a technical perspective, gold prices broke through the $3,335 resistance level last Friday and moved above the 200-period Simple Moving Average (SMA) on the 4-hour chart, providing confidence to bulls. Currently, the 200-period SMA is trading between $3,340 and $3,338, a level that has become key short-term support. Technical analysts at renowned institutions point out that oscillators such as the Relative Strength Index (RSI) on the 4-hour chart are gradually entering positive territory, indicating continued bullish momentum and the potential for buying on any pullbacks in gold prices in the short term.
However, gold prices encountered resistance today near the Asian session high of $3369-3370, failing to break through the $3400 mark. Technical traders note that $3400 is not only a psychological barrier but also a focal point for the recent bull-bear game. If gold can successfully break through this level, the next resistance level will be $3434-3435, and it may even challenge the all-time high of $3500 set in April. Conversely, if the price falls below the 200-period SMA at $3338, short-term buying may re-activate in the $3322-3320 area. $3300 is considered a key support level, and if it fails, bears may take the initiative.
Looking at the longer term, the daily chart shows that gold has been fluctuating at a high level since July, with its overall upward trend remaining unchanged. A technical analyst commented, "Gold's long-term trend remains bullish, and the short-term pullback is more of a technical adjustment than a trend reversal." Combined with current market sentiment, the resilience of gold prices near key support levels suggests that bulls are still awaiting further catalysts to drive a price breakout.
Regarding market sentiment, weakening global risk appetite provided additional support for gold. Trump's tariff rhetoric has stoked concerns about global supply chain disruptions. Combined with geopolitical risks, this has weakened investor appetite for riskier assets, increasing gold's appeal as a safe haven. Furthermore, the dollar's short-term rebound has not altered its downward trend for the year. Reputable analysts suggest that the high cost of holding the dollar in the current high-interest rate environment may limit further declines in the dollar, thereby indirectly supporting gold prices.
Today's market will also focus on US factory orders data, which may provide new guidance on US dollar demand. A weak reading could further reinforce expectations of interest rate cuts, positive for gold. Conversely, a better-than-expected reading could push up US Treasury yields and the US dollar index, putting pressure on gold in the short term. Traders generally believe that short-term gold price fluctuations will be influenced by both US dollar trends and risk sentiment.
Looking ahead, the gold market is expected to remain volatile at high levels, driven by a combination of fundamental and technical factors. Rising expectations of a September Federal Reserve rate cut, coupled with heightened geopolitical risks and trade uncertainty, have provided solid safe-haven support for gold. However, a short-term rebound in the US dollar and rising US Treasury yields may limit gold's upside potential. Technically, the strength of support in the $3,340-3,338 range will be crucial in the short term. If this level holds, bulls could push prices towards $3,400 or even higher.
In the medium to long term, the start of the Federal Reserve's interest rate cut cycle, heightened global economic uncertainty, and persistent geopolitical risks will all provide support for gold prices. Traders generally believe that gold's safe-haven and inflation-fighting properties will continue to play a role in the current macroeconomic environment. In the short term, investors should closely monitor the US dollar, US Treasury yields, and geopolitical developments to determine the direction of the next gold price breakthrough.
On August 4th, gold prices remained resilient amidst a rebound in the US dollar and safe-haven demand. Fundamental expectations of interest rate cuts and geopolitical risks provided support for gold, while key technical support levels provided confidence for bulls. Future gold price trends will depend on the direction of the US dollar, macroeconomic data, and the evolution of global risk sentiment. Investors should remain vigilant and seize opportunities presented by market fluctuations.
Fundamental analysis: Macroeconomic data and risk aversion coexist
Last Friday's release of the US non-farm payroll data for July captured market attention. The report showed only 73,000 new jobs, well below market expectations of 110,000. Data for May and June were revised downward, further highlighting signs of a cooling US labor market. The unemployment rate edged up to 4.2% from 4.1% in June, while the labor force participation rate fell to 62.2% from 62.3%. While the annual average hourly wage rate rose from 3.8% to 3.9%, indicating continued wage pressure, the overall weak data reinforced market expectations for a September Fed rate cut. Analysts from leading institutions noted that market bets on a September Fed rate cut are now near 100%, potentially positive for non-yielding gold.
However, the US dollar hasn't weakened significantly due to expectations of a rate cut. The US dollar index rebounded slightly today, supported by a modest rebound in US Treasury yields, partially offsetting last Friday's decline. Some traders believe the dollar's short-term rebound may be driven by short-covering, but given the impending Fed rate cut cycle, the dollar's upside potential is limited. This dollar trend has put some pressure on gold prices, but it hasn't triggered a sustained sell-off.
Geopolitical factors also provided support for gold. The ongoing tensions between Russia and Ukraine, along with Trump's recent tough stance against Russia, have further exacerbated risk aversion in the market. Trump reportedly ordered the deployment of two nuclear submarines to waters near Russia in response to provocative remarks by a former Russian official. This geopolitical uncertainty has fueled demand for gold as a safe haven. Furthermore, Trump's tariff rhetoric has stoked market concerns about a deteriorating global trade environment, prompting some investors to turn to gold as a hedge. A senior trader commented, "Gold's safe-haven properties will be difficult to replace in the short term, compounded by geopolitical risks and trade uncertainty."
Internal developments within the Federal Reserve are also adding uncertainty to the market. The resignation of Fed Board member Adriana Kugler and Trump's direct intervention in the head of the Bureau of Labor Statistics have raised concerns about the Fed's independence. Some traders suggest that this political pressure could limit the Fed's policy flexibility, leading to complex implications for the US dollar and gold prices. Despite this, the market generally believes that the Fed's path to rate cuts is relatively clear, providing support for gold's medium- to long-term outlook.
Technical analysis: Key support and resistance levels provide guidance
From a technical perspective, gold prices broke through the $3,335 resistance level last Friday and moved above the 200-period Simple Moving Average (SMA) on the 4-hour chart, providing confidence to bulls. Currently, the 200-period SMA is trading between $3,340 and $3,338, a level that has become key short-term support. Technical analysts at renowned institutions point out that oscillators such as the Relative Strength Index (RSI) on the 4-hour chart are gradually entering positive territory, indicating continued bullish momentum and the potential for buying on any pullbacks in gold prices in the short term.
However, gold prices encountered resistance today near the Asian session high of $3369-3370, failing to break through the $3400 mark. Technical traders note that $3400 is not only a psychological barrier but also a focal point for the recent bull-bear game. If gold can successfully break through this level, the next resistance level will be $3434-3435, and it may even challenge the all-time high of $3500 set in April. Conversely, if the price falls below the 200-period SMA at $3338, short-term buying may re-activate in the $3322-3320 area. $3300 is considered a key support level, and if it fails, bears may take the initiative.
Looking at the longer term, the daily chart shows that gold has been fluctuating at a high level since July, with its overall upward trend remaining unchanged. A technical analyst commented, "Gold's long-term trend remains bullish, and the short-term pullback is more of a technical adjustment than a trend reversal." Combined with current market sentiment, the resilience of gold prices near key support levels suggests that bulls are still awaiting further catalysts to drive a price breakout.
Market sentiment and drivers
Regarding market sentiment, weakening global risk appetite provided additional support for gold. Trump's tariff rhetoric has stoked concerns about global supply chain disruptions. Combined with geopolitical risks, this has weakened investor appetite for riskier assets, increasing gold's appeal as a safe haven. Furthermore, the dollar's short-term rebound has not altered its downward trend for the year. Reputable analysts suggest that the high cost of holding the dollar in the current high-interest rate environment may limit further declines in the dollar, thereby indirectly supporting gold prices.
Today's market will also focus on US factory orders data, which may provide new guidance on US dollar demand. A weak reading could further reinforce expectations of interest rate cuts, positive for gold. Conversely, a better-than-expected reading could push up US Treasury yields and the US dollar index, putting pressure on gold in the short term. Traders generally believe that short-term gold price fluctuations will be influenced by both US dollar trends and risk sentiment.
Future Trend Outlook
Looking ahead, the gold market is expected to remain volatile at high levels, driven by a combination of fundamental and technical factors. Rising expectations of a September Federal Reserve rate cut, coupled with heightened geopolitical risks and trade uncertainty, have provided solid safe-haven support for gold. However, a short-term rebound in the US dollar and rising US Treasury yields may limit gold's upside potential. Technically, the strength of support in the $3,340-3,338 range will be crucial in the short term. If this level holds, bulls could push prices towards $3,400 or even higher.
In the medium to long term, the start of the Federal Reserve's interest rate cut cycle, heightened global economic uncertainty, and persistent geopolitical risks will all provide support for gold prices. Traders generally believe that gold's safe-haven and inflation-fighting properties will continue to play a role in the current macroeconomic environment. In the short term, investors should closely monitor the US dollar, US Treasury yields, and geopolitical developments to determine the direction of the next gold price breakthrough.
On August 4th, gold prices remained resilient amidst a rebound in the US dollar and safe-haven demand. Fundamental expectations of interest rate cuts and geopolitical risks provided support for gold, while key technical support levels provided confidence for bulls. Future gold price trends will depend on the direction of the US dollar, macroeconomic data, and the evolution of global risk sentiment. Investors should remain vigilant and seize opportunities presented by market fluctuations.
- Risk Warning and Disclaimer
- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
