On Tuesday, August 4th, international gold prices saw a volatile session. The U.S. Treasury Secretary indicated that "freedom of navigation" through the Strait of Hormuz could be agreed upon within the next day or two, while a phone call between President Trump and the Emir of Qatar aimed to de-escalate regional tensions. These developments boosted expectations for the reopening of the Strait of Hormuz, sending crude oil prices tumbling for multiple days. The resulting market sentiment weighed on expectations that the Federal Reserve would raise interest rates more than once within the year, pressuring the U.S. dollar and providing support for gold prices.
However, profit-taking and weakening inflation reduced gold's appeal, causing prices to retreat from intraday highs. The metal ultimately closed higher with a long upper wick, remaining within its recent trading range. While gold shows a tendency to rebound and strengthen, the bearish crossover formed by the 100-day moving average suggests any rebound is likely to be a phase of the broader trend. After this phase, the market will need to assess resistance at the 100-day moving average and the associated risk of a pullback.
In terms of specific price action, gold opened at $4,054.14 per ounce in Asian trading and experienced a choppy session, initially hitting a daily low of $4,042.51. Bullish momentum increased during late European and early U.S. trading hours, pushing prices higher to a session high of $4,105.95 by 1:00 AM the following day. The rally eventually stalled, leading to a pullback, and gold settled at $4,076.83, with a daily range of $63.44. The day's gain was $22.69, or 0.56%.
Looking ahead to Wednesday, August 5th, international gold opened weaker, pressured by the overnight pullback and continuing its recent range-bound pattern. However, the U.S. dollar index has failed to stabilize and strengthen, and crude oil fell again yesterday, breaking below its 200-day moving average. This bearish signal in crude oil is likely to further reduce inflation expectations and the prospect of a rate hike, thereby supporting gold prices. Consequently, gold is expected to maintain a short-term bias of consolidation with a slight upward tilt, pending a clear breakout.
Key data to watch intraday includes the U.S. July ADP employment change, the final July S&P Global services PMI, and the July ISM non-manufacturing PMI. The market consensus leans towards these figures being positive for gold. The recommended intraday strategy is to sell into strength initially, before buying on dips. For the week, the overall trend is expected to remain range-bound, with a short-term direction pointing higher.
On the weekly chart, gold posted a bullish hammer candlestick last week, remaining within its multi-week consolidation range. While there is a tendency for a bottoming process and rebound, the metal still faces selling pressure from the 60-week SMA and the 5-10 week SMAs. The Bollinger Bands show a slight downward tilt, suggesting the risk of a sell-off remains. The potential for a drop to test the 100-week SMA near $3,700 cannot be ruled out. Any such move to that level would be a strong buying opportunity. Conversely, if prices can close above the 60-week SMA, it would signal a bullish breakout and a sustained uptrend, warranting a follow-through long position. Until then, the market is expected to continue its consolidation and range-bound adjustment.
On the daily chart, while gold has been oscillating above its uptrend line with a bullish bias, the bearish crossover of the 100-day MA and the 200-day MA indicates that any current rally is likely a bear market rally. Unless prices can break and hold above the $4,500 level, there remains a risk of a sell-off to a new low around the $3,700 mark. Therefore, until gold reaches a new bullish buying opportunity at a lower level or breaks above key resistance with a firm close, the recommended approach is to maintain a range-bound or short-term trading strategy.
Below is a preliminary reference for intraday trading levels. Exact entry and exit points will be based on actual account notifications:
Gold: Look for support at $4,055 or $4,030. Look for resistance at $4,095 or $4,115.
Silver: Look for support at $58.75 or $58.40. Look for resistance at $60.15 or $60.85.
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