On Thursday, we noted that the de-escalation signals in the Middle East had weakened gold's safe-haven demand, while the US PCE data showing persistent inflation nudged September rate hike expectations slightly higher. This combination triggered a short-term pullback in gold prices, leading to a phase of range-bound consolidation. The short-term technical picture also indicated that after hitting resistance at higher levels, gold needed to correct. Therefore, our operational guidance suggested watching support at $4583, followed by $4540 below, with resistance at $4633 and then $4673 above.
Looking at subsequent price action, gold found its footing at the $4600 psychological level during early Asian trading on Thursday, bouncing to a high of $4643 before encountering resistance. Prices then drifted lower through the European session, stabilizing at $4569 before rebounding to face resistance at $4601. Following the US market open, gold dipped again, bottoming out at $4565, then recovering to test $4618 where it faced renewed resistance. The precious metal currently trades near the $4606 level.
Overall, gold oscillated around the $4600 psychological mark on Thursday, forming a bullish doji candlestick on the daily chart. While the upside momentum has stalled, downside support remains clearly evident. According to Wolfinance's senior analyst, gold's recent uptrend has encountered resistance after failing to push higher, resulting in short-term pullback and consolidation. The easing Middle East tensions have alleviated concerns about a full-scale war, with oil prices briefly falling to a two-week low, diminishing gold's safe-haven appeal.
However, the primary catalyst was the US July PCE data, which showed year-over-year increases of 3.7% for headline and 3.3% for core inflation—both exceeding market expectations. This marked the 65th consecutive month that inflation has run above the Fed's target, slightly firming September rate hike expectations. In the aftermath, Fed officials delivered hawkish remarks. Hammack explicitly stated that rates are not tight enough and that now is the time for action to curb inflation, while Schmid indicated that policy remains accommodative and the Fed still has work to do. The rising September rate hike expectations have put downward pressure on gold.
Looking ahead, market attention now turns to Fed Chair Waller's speech at the global central bank symposium later today, which could significantly influence gold's short-term direction. On the daily chart, gold's upward momentum has slowed since Tuesday's rejection at higher levels, with the metal now in a consolidation phase. Key support below sits at the $4600 psychological level—where Thursday's US session rebound found stability—followed by Thursday's pullback low of $4565 and then the $4500 round figure. On the upside, resistance is seen at the 5-day moving average around $4625, which coincides with the mid-Bollinger Band on the 4-hour chart, followed by Thursday's high of $4643 and then the $4700 psychological level near this week's peak.
Technical indicators are showing mixed signals: the 5-day moving average's golden cross has significantly flattened, the MACD golden cross is turning slightly downward, the KDJ indicator has formed a bearish cross in overbought territory, and the RSI, after turning down from overbought conditions, has only marginally ticked higher. Short-term technicals suggest gold continues to need further consolidation after meeting resistance at higher levels.
For today's trading reference: with US PCE data exceeding the Fed's target for the 65th straight month and Fed officials delivering hawkish commentary—the core view being that current interest rate levels are insufficient to contain inflation and further action is required—September rate hike expectations have risen, pressuring gold prices. The metal's rally has stalled, leading to high-level range-bound trading. Our approach remains range-trading-oriented, with support at $4600, followed by $4565 and $4500, while resistance is at $4625, followed by $4643 and $4700.
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