The expectation of interest rate cuts is bullish for the gold market. Can technical factors continue to drive it forward?
2025-08-05 15:57:50
On Tuesday (August 5th), spot gold fell into a sideways pattern after three consecutive days of strong rebounds, trading around $3,375 during the European session, showing a short-term seesaw pattern. A slight rebound in the US dollar index put downward pressure on gold prices, but market expectations of a September Federal Reserve rate cut continued to support gold. Furthermore, continued global trade uncertainty has prevented a significant decline in safe-haven demand.
Gold's recent rally has been driven by weak US economic data and growing expectations of interest rate cuts. Last week's non-farm payroll data showed a significant weakening in the labor market, reinforcing market bets that the Federal Reserve will begin another round of rate cuts in September. The CME FedWatch tool shows that the market's expectation of a September rate cut has exceeded 90%. Meanwhile, US factory orders plummeted 4.8% in June, further highlighting economic weakness.
Meanwhile, US President Trump signed an executive order last week raising tariffs on imports from dozens of countries, with countries with trade deficits subject to a minimum tariff of 15%. The uncertainty surrounding these measures, which are about to take effect, continues to weigh on global market sentiment and bolster gold's safe-haven appeal.
However, a slight rebound in the US dollar partially offset gold's upward momentum. Traders will focus on the upcoming release of the US ISM Services PMI data to determine whether the economic slowdown has spread to the services sector.
Looking at the daily gold chart, the price has been trading between the middle Bollinger Band (3343.59) and the upper Bollinger Band (3411.09), yet to break through the key resistance area. The overall trend remains within the medium-term oscillation channel, with no clear trend forming.
The recent K-line combination forms a typical "oscillating sideways" pattern, indicating that the market is under obvious pressure near the previous high of 3438.80, while the lower Bollinger band of 3276.09 below provides support, presenting a "box consolidation" pattern in the short term.
In terms of MACD indicators, the fast and slow lines are running near the zero axis, DIFF and DEA are slightly golden cross but the angle is gentle, and the red column has limited momentum, indicating that the upward momentum is insufficient and a strong rebound structure has not yet formed.
The relative strength index (RSI) remained at 54.81, which is in the neutral to strong area, indicating that the price lacks a clear direction in the short term and the market sentiment is mainly wait-and-see. In the future, we need to pay attention to whether it can stand firmly above the middle Bollinger band or fall back to test the previous low support.
Gold market sentiment currently remains cautiously optimistic. Traders are pricing in a high interest rate cut from the Federal Reserve, driving a short-term rebound in gold prices. However, the dollar's resilience remains, limiting gold's upward potential. Indicators suggest a lack of significant inflows into gold ETFs, suggesting the market has yet to fully shift to a defensive position.
Technical charts are showing a typical "consolidation platform," suggesting the market awaits clearer policy or data guidance. Investors remain interested in safe-haven assets, but are less willing to chase higher prices. In the short term, market sentiment may continue to be constrained by fluctuations in external macroeconomic data and shifting policy expectations.
Bullish perspective:
Analysts believe that if gold prices break through the upper Bollinger Band at 3411.09 and the MACD indicator expands, further upside potential is expected, with the previous high of $3450 in the target range. If the Federal Reserve signals a clear interest rate cut or the US economy continues to weaken, gold could see a mid-term trend reversal and resume its upward trajectory.
Short perspective:
Analysts believe that if gold prices remain trapped in the 3400-3411 range and fall below the Bollinger Band and the moving average, a short-term pullback may occur, testing the lower support of $3276. If the ISM Services PMI is stronger than expected and the US dollar strengthens again, gold may return to a bearish trend.
Fundamentals:
Gold's recent rally has been driven by weak US economic data and growing expectations of interest rate cuts. Last week's non-farm payroll data showed a significant weakening in the labor market, reinforcing market bets that the Federal Reserve will begin another round of rate cuts in September. The CME FedWatch tool shows that the market's expectation of a September rate cut has exceeded 90%. Meanwhile, US factory orders plummeted 4.8% in June, further highlighting economic weakness.
Meanwhile, US President Trump signed an executive order last week raising tariffs on imports from dozens of countries, with countries with trade deficits subject to a minimum tariff of 15%. The uncertainty surrounding these measures, which are about to take effect, continues to weigh on global market sentiment and bolster gold's safe-haven appeal.
However, a slight rebound in the US dollar partially offset gold's upward momentum. Traders will focus on the upcoming release of the US ISM Services PMI data to determine whether the economic slowdown has spread to the services sector.
Technical aspects:
Looking at the daily gold chart, the price has been trading between the middle Bollinger Band (3343.59) and the upper Bollinger Band (3411.09), yet to break through the key resistance area. The overall trend remains within the medium-term oscillation channel, with no clear trend forming.
The recent K-line combination forms a typical "oscillating sideways" pattern, indicating that the market is under obvious pressure near the previous high of 3438.80, while the lower Bollinger band of 3276.09 below provides support, presenting a "box consolidation" pattern in the short term.
In terms of MACD indicators, the fast and slow lines are running near the zero axis, DIFF and DEA are slightly golden cross but the angle is gentle, and the red column has limited momentum, indicating that the upward momentum is insufficient and a strong rebound structure has not yet formed.
The relative strength index (RSI) remained at 54.81, which is in the neutral to strong area, indicating that the price lacks a clear direction in the short term and the market sentiment is mainly wait-and-see. In the future, we need to pay attention to whether it can stand firmly above the middle Bollinger band or fall back to test the previous low support.
Market sentiment observation:
Gold market sentiment currently remains cautiously optimistic. Traders are pricing in a high interest rate cut from the Federal Reserve, driving a short-term rebound in gold prices. However, the dollar's resilience remains, limiting gold's upward potential. Indicators suggest a lack of significant inflows into gold ETFs, suggesting the market has yet to fully shift to a defensive position.
Technical charts are showing a typical "consolidation platform," suggesting the market awaits clearer policy or data guidance. Investors remain interested in safe-haven assets, but are less willing to chase higher prices. In the short term, market sentiment may continue to be constrained by fluctuations in external macroeconomic data and shifting policy expectations.
Market outlook:
Bullish perspective:
Analysts believe that if gold prices break through the upper Bollinger Band at 3411.09 and the MACD indicator expands, further upside potential is expected, with the previous high of $3450 in the target range. If the Federal Reserve signals a clear interest rate cut or the US economy continues to weaken, gold could see a mid-term trend reversal and resume its upward trajectory.
Short perspective:
Analysts believe that if gold prices remain trapped in the 3400-3411 range and fall below the Bollinger Band and the moving average, a short-term pullback may occur, testing the lower support of $3276. If the ISM Services PMI is stronger than expected and the US dollar strengthens again, gold may return to a bearish trend.
- 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.
