Gold consolidation may be coming to an end, is momentum about to explode?
2025-07-18 21:59:57
On Friday (July 18), spot gold (XAU/USD) continued to consolidate, and the price rebounded to around $3,355 in the North American session, close to the upper track of the symmetrical triangle. The market is digesting the latest real estate data released in the United States. At the same time, divergent comments on the future monetary policy direction of the Federal Reserve have kept gold volatile at a high level.
The number of building permits in the United States in June was 1.39 million, higher than the market expectation of 1.394 million, up 0.2% month-on-month, a significant improvement. The number of new housing starts in the same period was 1.321 million, up 4.6% month-on-month, breaking away from the 9.7% drop in the previous month, indicating that the real estate market is gradually recovering.
The Fed's policy divergence has intensified, and market speculation has heated up. According to the CME FedWatch tool, the market's expected probability of a rate cut in September is 56.2%, with a 25 basis point cut expected, and a 41.2% probability of keeping the interest rate unchanged. Previously, many Fed officials expressed different views, some holding hawkish positions, and some preferring to start cutting interest rates this year.
The trend of gold prices is currently mainly affected by the following three factors:
1. US economic data supports the dollar. The latest US real estate data is generally positive, with building permits and new housing starts exceeding expectations. The recovery of the real estate market has reduced market concerns about economic recession, which has provided some support to the US dollar and thus suppressed gold to a certain extent.
2. Fed policy differences trigger market speculation Fed officials have obvious differences in their statements on monetary policy. Christopher Waller, a Fed governor, is inclined to directly cut interest rates by 25 basis points in July, worried about economic slowdown and weak job market. San Francisco Fed President Daly believes that two interest rate cuts in 2025 are "reasonable", but is wary of the impact of over-tightening policies on the job market. On the contrary, Fed Governor Kugler is more hawkish, believing that recent tariffs have been transmitted to consumer prices, and high interest rates should continue to be maintained, and it is not appropriate to cut interest rates for the time being. The existence of differences has caused market expectations to waver, and gold has fallen into consolidation.
3. Inflation expectations determine the medium-term direction of gold prices. The U.S. CPI data for June showed that inflation showed signs of picking up, which may cause the Federal Reserve to postpone the pace of interest rate cuts.
Judging from the daily chart, gold is currently oscillating within an obvious symmetrical triangle, forming a consolidation pattern in the short term.
Bollinger Band indicator: The middle track of the Bollinger Band is at $3343.98, the upper track is at $3408.44, and the lower track is at $3279.52. The current price is running near the middle track, indicating that volatility is converging and there is an expectation that a direction will be chosen soon.
Support and Resistance: The current key support level below is $3,280; the upper resistance is the $3,400 round mark, and after breaking through it is expected to test the previous highs of $3,451 and $3,499.
MACD indicator: The MACD histogram is gradually converging, and the DIFF line (3.19) and the DEA line (1.91) are in a sticky state, indicating that the momentum is exhausted and the probability of short-term shocks is high, but once a large-volume breakthrough occurs, the trend may form quickly.
RSI indicator: The RSI indicator is currently at 53.64, which is in the neutral area and has not entered the overbought or oversold area, indicating that the market is still waiting for new direction signals.
Overall, the analysis shows that gold is at the end of a symmetrical triangle, and technical indicators show that it is about to break through. The direction may appear tonight or early next week.
The current market sentiment is biased towards wait-and-see, and the divergence between long and short positions of traders has intensified. The short-term positive macro data has raised the market's expectations for a soft landing of the economy, leading to some long positions being reduced. On the other hand, the debate over the resurgence of inflation and the Fed's policy shift still keeps safe-haven funds in a certain gold allocation to maintain liquidity. The market fear and greed index is in a neutral and cautious state, reflecting that traders tend to wait for more signal confirmation.
Bullish Outlook:
Analysts believe that if gold effectively breaks through the $3,400 resistance, it will complete the upper track breakthrough of the symmetrical triangle, and the market may usher in a new round of upward trend, further looking at $3,451, or even testing the previous high of $3,499. At this time, market sentiment will turn optimistic, funds may accelerate inflows into the gold market, and the safe-haven attribute will resume its dominant position.
Bearish Outlook:
Analysts believe that if the gold price falls below the $3,280 support level and the lower track of the triangle is lost, it may open up further downward space, and the probability of retreating to $3,120 or even $3,000 will increase. If the Fed expresses a hawkish attitude or inflation data continues to rise, it will strengthen the bearish market sentiment.
Mid-term perspective:
Considering the current macro environment, there is still uncertainty as to whether the Federal Reserve will cut interest rates this year. Gold may fluctuate repeatedly within a range, waiting for a clearer turning point in the macro fundamentals.
The number of building permits in the United States in June was 1.39 million, higher than the market expectation of 1.394 million, up 0.2% month-on-month, a significant improvement. The number of new housing starts in the same period was 1.321 million, up 4.6% month-on-month, breaking away from the 9.7% drop in the previous month, indicating that the real estate market is gradually recovering.
The Fed's policy divergence has intensified, and market speculation has heated up. According to the CME FedWatch tool, the market's expected probability of a rate cut in September is 56.2%, with a 25 basis point cut expected, and a 41.2% probability of keeping the interest rate unchanged. Previously, many Fed officials expressed different views, some holding hawkish positions, and some preferring to start cutting interest rates this year.
Fundamentals
The trend of gold prices is currently mainly affected by the following three factors:
1. US economic data supports the dollar. The latest US real estate data is generally positive, with building permits and new housing starts exceeding expectations. The recovery of the real estate market has reduced market concerns about economic recession, which has provided some support to the US dollar and thus suppressed gold to a certain extent.
2. Fed policy differences trigger market speculation Fed officials have obvious differences in their statements on monetary policy. Christopher Waller, a Fed governor, is inclined to directly cut interest rates by 25 basis points in July, worried about economic slowdown and weak job market. San Francisco Fed President Daly believes that two interest rate cuts in 2025 are "reasonable", but is wary of the impact of over-tightening policies on the job market. On the contrary, Fed Governor Kugler is more hawkish, believing that recent tariffs have been transmitted to consumer prices, and high interest rates should continue to be maintained, and it is not appropriate to cut interest rates for the time being. The existence of differences has caused market expectations to waver, and gold has fallen into consolidation.
3. Inflation expectations determine the medium-term direction of gold prices. The U.S. CPI data for June showed that inflation showed signs of picking up, which may cause the Federal Reserve to postpone the pace of interest rate cuts.
Technical aspects:
Judging from the daily chart, gold is currently oscillating within an obvious symmetrical triangle, forming a consolidation pattern in the short term.
Bollinger Band indicator: The middle track of the Bollinger Band is at $3343.98, the upper track is at $3408.44, and the lower track is at $3279.52. The current price is running near the middle track, indicating that volatility is converging and there is an expectation that a direction will be chosen soon.
Support and Resistance: The current key support level below is $3,280; the upper resistance is the $3,400 round mark, and after breaking through it is expected to test the previous highs of $3,451 and $3,499.
MACD indicator: The MACD histogram is gradually converging, and the DIFF line (3.19) and the DEA line (1.91) are in a sticky state, indicating that the momentum is exhausted and the probability of short-term shocks is high, but once a large-volume breakthrough occurs, the trend may form quickly.
RSI indicator: The RSI indicator is currently at 53.64, which is in the neutral area and has not entered the overbought or oversold area, indicating that the market is still waiting for new direction signals.
Overall, the analysis shows that gold is at the end of a symmetrical triangle, and technical indicators show that it is about to break through. The direction may appear tonight or early next week.
Market sentiment observation:
The current market sentiment is biased towards wait-and-see, and the divergence between long and short positions of traders has intensified. The short-term positive macro data has raised the market's expectations for a soft landing of the economy, leading to some long positions being reduced. On the other hand, the debate over the resurgence of inflation and the Fed's policy shift still keeps safe-haven funds in a certain gold allocation to maintain liquidity. The market fear and greed index is in a neutral and cautious state, reflecting that traders tend to wait for more signal confirmation.
Outlook for the future:
Bullish Outlook:
Analysts believe that if gold effectively breaks through the $3,400 resistance, it will complete the upper track breakthrough of the symmetrical triangle, and the market may usher in a new round of upward trend, further looking at $3,451, or even testing the previous high of $3,499. At this time, market sentiment will turn optimistic, funds may accelerate inflows into the gold market, and the safe-haven attribute will resume its dominant position.
Bearish Outlook:
Analysts believe that if the gold price falls below the $3,280 support level and the lower track of the triangle is lost, it may open up further downward space, and the probability of retreating to $3,120 or even $3,000 will increase. If the Fed expresses a hawkish attitude or inflation data continues to rise, it will strengthen the bearish market sentiment.
Mid-term perspective:
Considering the current macro environment, there is still uncertainty as to whether the Federal Reserve will cut interest rates this year. Gold may fluctuate repeatedly within a range, waiting for a clearer turning point in the macro fundamentals.
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- 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.
