Gold prices traded in a volatile range on August 5, showing a mild bullish bias. The metal opened the Asian session with limited movement, oscillating around $4,050. It gained momentum during the U.S. session, hitting a fresh intraday high of $4,106 before retreating. Gold ultimately settled at $4,077, closing the session with a small bullish candle.
On Wednesday, signals from Qatar and the U.S. regarding progress in U.S.-Iran negotiations triggered expectations of a reopening of the Strait of Hormuz, leading to a more than 5% drop in oil prices. This cooling of inflation expectations reduced the probability of a Federal Reserve interest rate hike from 68% to 59%, while U.S. Treasury yields fell. This scenario provided support for gold, pushing prices higher. However, the rally was not a clean breakout. Iran has not yet fully aligned its stance, and shipping risks have not completely dissipated. The situation is a "phase of easing, not a full resolution," causing gold to struggle to hold gains, with profit-taking emerging after each high.
Tonight, investors will focus on the release of the U.S. July ADP employment report at 20:15, followed by the ISM non-manufacturing PMI at 22:00. The market is currently betting on a scenario where softening employment data leads to further declines in rate hike expectations, which would support gold. However, if the ADP data surprises to the upside, a stronger U.S. dollar could pressure gold prices. Simply put, weak data is bullish for gold, while strong data could trigger a correction.
From a technical perspective, the daily chart shows a shooting star pattern, with the $4,106-$4,115 zone acting as a strong short-term resistance level. The metal tested this area but failed to close above it. On the downside, the $4,054-$4,042 range serves as the immediate support zone from Monday's rally, while the $4,000 level represents a psychological and technical double-bottom support. The 4-hour chart shows the moving averages consolidating around $4,053-$4,075, indicating a typical sideways range. The MACD histogram is shrinking, suggesting that chasing the rally may not offer a favorable risk-reward ratio.
In summary, the "expectation" of progress in U.S.-Iran talks is improving, but Iran has not yet made a firm commitment. The outcome of these negotiations remains the most uncertain variable, capable of shifting market direction on a single statement. For gold traders, the current window before key data releases is not about guessing the next move, but about waiting for confirmation. The ADP report tonight is the first signal, with Friday's non-farm payrolls being the real test. Patience is advised.
For today's trading strategy, consider selling gold at $4,080-$4,078, with a stop-loss at $4,090 and a target of $4,030-$4,020. Key economic events to watch today include the U.S. July ADP employment numbers at 20:15, the U.S. July S&P Global Services PMI final at 21:45, and the U.S. July ISM non-manufacturing PMI at 22:00. Additionally, Federal Reserve Board Governor Christopher Waller will speak on the economic outlook at 04:05 the next day.
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