On Wednesday, August 27th, we noted in our previous analysis that the U.S. Treasury's debt buyback program continued to influence market dynamics, with declining real interest rates reducing the cost of holding gold. Concerns over U.S. debt credibility and currency devaluation drove capital flows into the precious metal, supporting gold's upward momentum during Tuesday's session. However, short-term technical indicators suggested gold still had room to climb further, though traders were advised to remain cautious of overbought correction risks. Our operational guidance recommended monitoring support levels at $4634 and $4600, with resistance levels at $4700 and $4760.
Looking at subsequent price action, gold experienced a modest uptick during Wednesday's Asian trading hours, encountering resistance at $4673 before pulling back to find stability at $4630. A rebound attempt stalled again at $4670, followed by renewed selling pressure during European hours that pushed prices down to $4613. During U.S. trading, gold made two unsuccessful attempts to break above $4633, after which it faced further downside pressure, hitting a fresh daily low of $4853. The metal subsequently stabilized at these levels, entering a sideways consolidation pattern, and is currently trading near $4602.
Overall, gold's multi-day rally has lost some momentum, with short-term fluctuations indicating overbought conditions warranting correction. According to Wolfinance's star analyst, Wednesday's failure to extend gains can be attributed to several key factors. First, signals of easing tensions in the Middle East emerged as the United States paused new military strikes, opting instead for naval blockades and economic sanctions while preparing to send diplomats back to the region. Additionally, Iran and Oman agreed to establish a secure maritime corridor through the Strait of Hormuz, which alleviated concerns about a full-scale war and reduced gold's safe-haven appeal.
Second, the U.S. July PCE data showed a year-over-year increase of 3.7%, with core PCE rising 3.3%, both exceeding market expectations. This marked the 65th consecutive month that the inflation gauge has remained above the Federal Reserve's target. Following the data release, expectations for a September rate hike edged slightly higher, prompting the dollar to rebound to a one-week high, which in turn pressured gold prices.
On the daily chart, gold encountered resistance during Tuesday's rally and underwent a corrective pullback on Wednesday, with short-term upward momentum slowing as the metal entered a high-level consolidation phase. Key support levels to monitor include the Wednesday pullback low of $4583, where multiple U.S. session tests found stability, followed by last Thursday's high of $4540, which was surpassed during Friday's rally. On the upside, resistance can be identified at $4633, the level where Wednesday's U.S. session rebounds repeatedly stalled and which coincides with the current 4-hour Bollinger Band midline. A breakout above this level would bring Wednesday's high of $4673 into focus, aligning with the 4-hour Bollinger Band upper boundary.
Technical indicators show the 5-day moving average golden cross losing momentum, the MACD golden cross visibly decelerating, and the KDJ indicator forming a death cross in overbought territory. The RSI indicator, having turned downward from near-overbought levels, is now showing a slight golden cross uptick. These short-term technical signals suggest gold faces adjustment pressure after encountering resistance during its upward push.
For today's trading reference: easing Middle East tensions have diminished gold's safe-haven demand, while U.S. PCE data indicating persistent inflation has modestly raised September rate hike expectations. These combined factors have triggered gold's short-term pullback, with the metal entering a corrective consolidation phase. Our recommendation is to maintain a range-bound trading approach, with support levels at $4853 and $4540, and resistance levels at $4633 and $4673.
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