Market Analysis: Gold Seeks Technical Breakthrough Amid High-Level Fluctuations
2025-08-07 17:57:36
Spot gold continued its recent consolidation trend during the European session on Thursday (August 7), holding near the high of its weekly range at $3,375. Trade tensions have fueled increased risk aversion in the market, while expectations of a Federal Reserve rate cut this year have strengthened, acting as a key driver of gold prices. Furthermore, the US dollar index dipped to a near two-week low, providing further support for gold.
The current gold price is mainly supported by the following fundamental factors:
First, US President Trump signed an executive order imposing an additional 25% tariff on Indian imports, bringing the cumulative tariff rate to 50%. Meanwhile, the market expects Japanese goods to face an additional 15% tariff. This series of policies has fueled concerns about global economic uncertainty, significantly increasing market demand for safe-haven assets, and benefiting gold.
Secondly, recent weak US economic data, including last Friday's weaker-than-expected non-farm payrolls and Tuesday's subdued ISM services PMI, have reinforced expectations of a Federal Reserve rate cut this year. The CME FedWatch tool shows the market is pricing in a over 90% probability of a September rate cut, with a high probability of two cuts by year-end.
In addition, the US dollar has been under pressure recently, weakening to a one-week low against major currencies. Since gold is priced in US dollars, the weakening of the US dollar has increased the purchasing power of non-US markets, indirectly pushing up gold prices.
Although the equity market as a whole is optimistic, the upward trend of risky assets has not curbed the momentum of gold, indicating that the current market sentiment has not yet returned to a risk-oriented one, and gold is still playing the role of a core safe-haven asset.
From the daily chart, the gold price maintained a volatile consolidation structure after rebounding from the low of $2956.67. It has now returned above the middle track of the Bollinger band ($3345.65) and is approaching the upper track of the Bollinger band ($3415.10).
The Bollinger Bands are showing signs of convergence, indicating a phased contraction in volatility, which could be a precursor to a potential breakout. A subsequent breakout above the upper Bollinger Band on larger volume would signal a "Bollinger Band squeeze + breakout," potentially testing the previous high of $3,499.83. Otherwise, if resistance is encountered and a pullback occurs, primary support lies below the middle Bollinger Band at $3,345, with strong support near the lower Bollinger Band at $3,276.19.
Regarding the MACD indicator, the fast and slow lines formed a golden cross structure, and the MACD histogram turned red, indicating that bullish momentum is gradually recovering. The RSI indicator has steadily risen above the neutral range, with the current reading of 54.41, suggesting that gold prices still have room to rise and have not yet entered an overbought state.
Overall, gold is currently at the upper end of the range of fluctuations. If it can achieve an effective breakthrough, it means that the short-term trend will shift from consolidation to upward trend.
While equity markets remain relatively optimistic, gold's performance suggests continued market concerns about macroeconomic risks. Especially amidst expectations of a shift in interest rate policy and frequent changes in global tariff policies, the market remains highly sensitive to the economic outlook, and demand for safe-haven assets remains high.
It is noteworthy that gold has not been significantly depressed by the rebound in risky assets, reflecting the current market sentiment of being "risk-neutral to conservative." In other words, the market has not fully invested in risky assets, but is seeking a balanced allocation between gold and equity markets. This structural capital diversion provides support for gold.
Driven by monetary policy expectations and risk aversion, bullish sentiment in the gold market has intensified. Although there has not been an outburst of extreme sentiment, a "buy on dips" and "wait and see" mentality has gradually taken hold, with overall sentiment leaning towards bullishness.
Bullish Outlook:
If gold prices successfully break through the upper Bollinger Band and stabilize at $3,400 in the coming trading days, the short-term target is expected to be the previous high of $3,499.83. Further upward movement could challenge the psychological barrier of $3,550. Against the backdrop of a weakening dollar and a dovish Federal Reserve policy, gold has the potential to establish an upward trend.
In addition, if global macro policies continue to create uncertainty, gold's strategic position as a "systemic safe-haven asset" will be further strengthened, driving the medium- and long-term trend to continue to develop upward.
Bearish Outlook:
If gold fails to effectively break through the current resistance area, the price may fall into range fluctuations again. Short-term support should focus on the middle Bollinger band of $3,345. If it falls below, it may trigger a technical retracement, with the target looking at the range of $3,276 to $3,120.
Fundamentals
The current gold price is mainly supported by the following fundamental factors:
First, US President Trump signed an executive order imposing an additional 25% tariff on Indian imports, bringing the cumulative tariff rate to 50%. Meanwhile, the market expects Japanese goods to face an additional 15% tariff. This series of policies has fueled concerns about global economic uncertainty, significantly increasing market demand for safe-haven assets, and benefiting gold.
Secondly, recent weak US economic data, including last Friday's weaker-than-expected non-farm payrolls and Tuesday's subdued ISM services PMI, have reinforced expectations of a Federal Reserve rate cut this year. The CME FedWatch tool shows the market is pricing in a over 90% probability of a September rate cut, with a high probability of two cuts by year-end.
In addition, the US dollar has been under pressure recently, weakening to a one-week low against major currencies. Since gold is priced in US dollars, the weakening of the US dollar has increased the purchasing power of non-US markets, indirectly pushing up gold prices.
Although the equity market as a whole is optimistic, the upward trend of risky assets has not curbed the momentum of gold, indicating that the current market sentiment has not yet returned to a risk-oriented one, and gold is still playing the role of a core safe-haven asset.
Technical aspects:
From the daily chart, the gold price maintained a volatile consolidation structure after rebounding from the low of $2956.67. It has now returned above the middle track of the Bollinger band ($3345.65) and is approaching the upper track of the Bollinger band ($3415.10).
The Bollinger Bands are showing signs of convergence, indicating a phased contraction in volatility, which could be a precursor to a potential breakout. A subsequent breakout above the upper Bollinger Band on larger volume would signal a "Bollinger Band squeeze + breakout," potentially testing the previous high of $3,499.83. Otherwise, if resistance is encountered and a pullback occurs, primary support lies below the middle Bollinger Band at $3,345, with strong support near the lower Bollinger Band at $3,276.19.
Regarding the MACD indicator, the fast and slow lines formed a golden cross structure, and the MACD histogram turned red, indicating that bullish momentum is gradually recovering. The RSI indicator has steadily risen above the neutral range, with the current reading of 54.41, suggesting that gold prices still have room to rise and have not yet entered an overbought state.
Overall, gold is currently at the upper end of the range of fluctuations. If it can achieve an effective breakthrough, it means that the short-term trend will shift from consolidation to upward trend.
Market sentiment observation:
While equity markets remain relatively optimistic, gold's performance suggests continued market concerns about macroeconomic risks. Especially amidst expectations of a shift in interest rate policy and frequent changes in global tariff policies, the market remains highly sensitive to the economic outlook, and demand for safe-haven assets remains high.
It is noteworthy that gold has not been significantly depressed by the rebound in risky assets, reflecting the current market sentiment of being "risk-neutral to conservative." In other words, the market has not fully invested in risky assets, but is seeking a balanced allocation between gold and equity markets. This structural capital diversion provides support for gold.
Driven by monetary policy expectations and risk aversion, bullish sentiment in the gold market has intensified. Although there has not been an outburst of extreme sentiment, a "buy on dips" and "wait and see" mentality has gradually taken hold, with overall sentiment leaning towards bullishness.
Market outlook:
Bullish Outlook:
If gold prices successfully break through the upper Bollinger Band and stabilize at $3,400 in the coming trading days, the short-term target is expected to be the previous high of $3,499.83. Further upward movement could challenge the psychological barrier of $3,550. Against the backdrop of a weakening dollar and a dovish Federal Reserve policy, gold has the potential to establish an upward trend.
In addition, if global macro policies continue to create uncertainty, gold's strategic position as a "systemic safe-haven asset" will be further strengthened, driving the medium- and long-term trend to continue to develop upward.
Bearish Outlook:
If gold fails to effectively break through the current resistance area, the price may fall into range fluctuations again. Short-term support should focus on the middle Bollinger band of $3,345. If it falls below, it may trigger a technical retracement, with the target looking at the range of $3,276 to $3,120.
- 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.
