Powell's successor is yet to be determined, and the gold market is waiting for the "shoe to drop"
2025-08-06 19:52:20
On Wednesday (August 6th), spot gold prices retreated after a period of continuous gains, falling to around $3,365 in pre-market trading in the US, remaining range-bound throughout the day. Previously, weak US non-farm payroll data had fueled market expectations that the Federal Reserve would resume its easing cycle at its September meeting. However, while expectations of easing are positive for gold, a non-interest-bearing asset, recent political developments and a slowdown in central bank gold purchases have also weighed on gold prices.
The latest U.S. non-farm payroll report for July revealed labor market weakness, prompting a surge in bets on a Federal Reserve interest rate cut. Traders expect the Fed to shift to a more accommodative monetary policy path as early as September. Expectations of easing typically support gold prices by pushing down real interest rates and increasing the metal's appeal.
In addition, US President Trump said this week that he would soon nominate a new candidate to replace Adriana Kugler on the Federal Reserve Board. He also confirmed that the list of candidates for Fed Chairman Powell's successor has been narrowed to four, including White House economic adviser Kevin Hassett and former Fed Board member Kevin Warsh. These candidates are generally considered to be more inclined towards a low interest rate stance, further strengthening market bets on future rate cuts.
However, according to global central bank gold purchase data, global official gold reserves increased by 166 tons in the second quarter of 2025, a 33% decrease from the first quarter. While the Polish central bank continued to increase its holdings, its pace of gold purchases has slowed significantly. Meanwhile, Uzbekistan ended a four-month streak of net sales, purchasing 9 tons in June. Despite the overall cooling in demand, many central banks are maintaining their strategy of using gold as a diversification tool for foreign exchange reserves.
Looking at the daily chart, gold prices are currently trading between the middle and upper Bollinger Bands, slightly above the middle band at $3,344.86, and remain in a high-level oscillation range. The Bollinger Bands have not narrowed significantly, indicating that market volatility remains relatively neutral.
Gold prices have recently made several unsuccessful attempts to break above the upper band, with the previous highs of $3451.14 and $3438.80 forming significant resistance. Support is now seen around $3276.39, the lower Bollinger Band, which forms a secondary defensive zone with the previous low of $3120.64.
Looking at the MACD indicator, the DIFF line is slightly above the DEA line, and the histogram has just turned red, indicating that gold prices are attempting a short-term rebound, but the momentum is still insufficient, and it remains to be seen whether a valid "golden cross" will form in the future. If the histogram continues to expand with increasing volume, it may signal a short-term rise.
The RSI indicator (14 days) currently maintains at 53.22, which is in the neutral to strong range, and there are no obvious overbought or oversold signals in the short term. Overall, the technical side shows a relatively volatile pattern, and the breakthrough direction still needs further confirmation.
From the perspective of market sentiment, the gold market is currently in a tug-of-war between bulls and bears. On the one hand, traders continue to bet that the Federal Reserve will restart its interest rate cut cycle. In addition, politicians' dissatisfaction with the current tightening policy has made the market more certain about the future policy shift, which is bullish for gold.
On the other hand, some macro hedge funds remain cautious about the continued rise in gold prices, believing that the slowdown in central bank gold purchases may indicate the approaching of a temporary top. Furthermore, gold has repeatedly encountered resistance near $3,450, coupled with a high concentration of long positions, which may put pressure on short-term bullish sentiment to retreat.
It's worth noting that while global central banks remain net buyers overall, two consecutive quarters of reduced gold purchases may weaken the medium- to long-term support for gold prices. Against this backdrop, sentiment in the gold market has diverged somewhat, with short-term optimism hinting at the possibility of a mid-term correction.
Short-term outlook:
In the short term, analysts believe that if the inflation or employment data released by the United States further weakens, the market will price in a September rate cut more firmly, and the gold price is expected to test the resistance range of $3438.80-3451.14 again; if it breaks through this area, it will open up further upside space and target the previous high of $3499.83.
However, if the market has different interpretations of the impact of the personnel change, or Powell's successor is not significantly dovish, it may have an impact on gold prices, and then push prices down to test the support of the middle Bollinger band; if the middle band is lost, the price will fall to the support of the lower Bollinger band of $3276.39.
Medium- to long-term outlook:
In the medium to long term, the trend of global central banks de-dollarizing remains one of the core logics supporting gold. Analysts believe that despite the short-term slowdown in the pace of gold purchases, from a structural perspective, gold's position in the international reserve system remains attractive.
If the Federal Reserve clearly enters the interest rate cut channel in the future and real interest rates fall significantly, the value of gold as a hedging tool will be further enhanced. In this case, the probability of gold prices maintaining an upward trend in the medium and long term is high;
However, it should be noted that if the Federal Reserve reiterates that high interest rates will be maintained for a longer period of time or there are signs of re-acceleration of inflation, gold may experience a trend adjustment. Therefore, traders are closely watching core macroeconomic data and policy statements.
Fundamentals:
The latest U.S. non-farm payroll report for July revealed labor market weakness, prompting a surge in bets on a Federal Reserve interest rate cut. Traders expect the Fed to shift to a more accommodative monetary policy path as early as September. Expectations of easing typically support gold prices by pushing down real interest rates and increasing the metal's appeal.
In addition, US President Trump said this week that he would soon nominate a new candidate to replace Adriana Kugler on the Federal Reserve Board. He also confirmed that the list of candidates for Fed Chairman Powell's successor has been narrowed to four, including White House economic adviser Kevin Hassett and former Fed Board member Kevin Warsh. These candidates are generally considered to be more inclined towards a low interest rate stance, further strengthening market bets on future rate cuts.
However, according to global central bank gold purchase data, global official gold reserves increased by 166 tons in the second quarter of 2025, a 33% decrease from the first quarter. While the Polish central bank continued to increase its holdings, its pace of gold purchases has slowed significantly. Meanwhile, Uzbekistan ended a four-month streak of net sales, purchasing 9 tons in June. Despite the overall cooling in demand, many central banks are maintaining their strategy of using gold as a diversification tool for foreign exchange reserves.
Technical aspects:
Looking at the daily chart, gold prices are currently trading between the middle and upper Bollinger Bands, slightly above the middle band at $3,344.86, and remain in a high-level oscillation range. The Bollinger Bands have not narrowed significantly, indicating that market volatility remains relatively neutral.
Gold prices have recently made several unsuccessful attempts to break above the upper band, with the previous highs of $3451.14 and $3438.80 forming significant resistance. Support is now seen around $3276.39, the lower Bollinger Band, which forms a secondary defensive zone with the previous low of $3120.64.
Looking at the MACD indicator, the DIFF line is slightly above the DEA line, and the histogram has just turned red, indicating that gold prices are attempting a short-term rebound, but the momentum is still insufficient, and it remains to be seen whether a valid "golden cross" will form in the future. If the histogram continues to expand with increasing volume, it may signal a short-term rise.
The RSI indicator (14 days) currently maintains at 53.22, which is in the neutral to strong range, and there are no obvious overbought or oversold signals in the short term. Overall, the technical side shows a relatively volatile pattern, and the breakthrough direction still needs further confirmation.
Market sentiment observation:
From the perspective of market sentiment, the gold market is currently in a tug-of-war between bulls and bears. On the one hand, traders continue to bet that the Federal Reserve will restart its interest rate cut cycle. In addition, politicians' dissatisfaction with the current tightening policy has made the market more certain about the future policy shift, which is bullish for gold.
On the other hand, some macro hedge funds remain cautious about the continued rise in gold prices, believing that the slowdown in central bank gold purchases may indicate the approaching of a temporary top. Furthermore, gold has repeatedly encountered resistance near $3,450, coupled with a high concentration of long positions, which may put pressure on short-term bullish sentiment to retreat.
It's worth noting that while global central banks remain net buyers overall, two consecutive quarters of reduced gold purchases may weaken the medium- to long-term support for gold prices. Against this backdrop, sentiment in the gold market has diverged somewhat, with short-term optimism hinting at the possibility of a mid-term correction.
Market outlook:
Short-term outlook:
In the short term, analysts believe that if the inflation or employment data released by the United States further weakens, the market will price in a September rate cut more firmly, and the gold price is expected to test the resistance range of $3438.80-3451.14 again; if it breaks through this area, it will open up further upside space and target the previous high of $3499.83.
However, if the market has different interpretations of the impact of the personnel change, or Powell's successor is not significantly dovish, it may have an impact on gold prices, and then push prices down to test the support of the middle Bollinger band; if the middle band is lost, the price will fall to the support of the lower Bollinger band of $3276.39.
Medium- to long-term outlook:
In the medium to long term, the trend of global central banks de-dollarizing remains one of the core logics supporting gold. Analysts believe that despite the short-term slowdown in the pace of gold purchases, from a structural perspective, gold's position in the international reserve system remains attractive.
If the Federal Reserve clearly enters the interest rate cut channel in the future and real interest rates fall significantly, the value of gold as a hedging tool will be further enhanced. In this case, the probability of gold prices maintaining an upward trend in the medium and long term is high;
However, it should be noted that if the Federal Reserve reiterates that high interest rates will be maintained for a longer period of time or there are signs of re-acceleration of inflation, gold may experience a trend adjustment. Therefore, traders are closely watching core macroeconomic data and policy statements.
- 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.
