Gold prices rebounded during the Asian and European trading hours on Tuesday (August 12), stalling their rebound. Spot gold briefly rose 0.4% to around $3,357/oz, but the rebound lacked momentum and has now retreated to around $3,346.82/oz, still near the previous day's one-week low. Market expectations are that the Federal Reserve will resume its rate cut cycle in September, but this expectation limits the dollar's potential for recovery, which in turn provides some support for gold, a non-interest-bearing asset.
However, gold bulls appear reluctant to make large bets, opting instead to await the latest US inflation data. This key data will provide fresh clues about the Fed's rate cut path, in turn impacting dollar demand and providing a substantial boost to gold prices. Meanwhile, the extension of the US-China trade truce and optimistic expectations for a US-Russia summit aimed at ending the war in Ukraine could pose bearish factors for gold.
Market Dynamics: Gold prices benefited from Fed rate cut bets, while US dollar demand remained subdued.
Gold prices fell sharply on Monday as easing geopolitical tensions weighed on traditional safe-haven assets. Investors are pinning high hopes on Friday's US-Russia summit, believing it will increase the likelihood of an end to the long-running Russia-Ukraine conflict. Furthermore, continued buying of the US dollar contributed to a sharp drop of approximately 1.65% in precious metals overnight.
Market participants are generally betting on a 25 basis point interest rate cut by the Federal Reserve in September, with at least two more by year-end. This expectation is bolstered by a recent string of disappointing US economic data, including the closely watched non-farm payroll report, which suggests the economy may be weakening.
However, traders are likely to refrain from making large directional bets, opting to wait and see ahead of US inflation data, which could provide further clues about the interest rate outlook.
The US Producer Price Index (PPI) will be released on Thursday, followed by US retail sales data and the Michigan Consumer Confidence Index on Friday. Furthermore, speeches by several key Federal Reserve (FOMC) officials will also influence the US dollar's short-term trajectory and provide significant support for gold prices.
On the trade front, US President Trump signed an executive order on Monday extending the US-China trade truce for three months, easing market concerns about a trade war between the world's two largest economies. Trump previously stated in a social media post that gold would not be subject to tariffs, but provided no further details.
Gold bears need to wait for a break below the key support level near $3342.
Technically, gold has successfully held the key support level of the 200-period SMA on the 4-hour chart, currently located in the $3344-3342 range. Given that oscillators on the chart are showing downward momentum, a break below this support level could drag gold towards the intermediate support level of $3315 and, subsequently, the $3300 mark. Any subsequent selling would be seen as a new trigger for short traders and pave the way for further declines in gold prices.
Conversely, a rebound above the $3358-3360 area could face strong resistance near $3380. A sustained break above this resistance level would allow gold to make another attempt to conquer the $3400 mark. A further break above last week's swing high of $3409-3410 would reverse the current bearish outlook and push gold prices towards testing the next key resistance level of $3422-3423. Upward momentum could extend to the strong horizontal resistance level of $3434-3435. A clear break above this resistance could challenge the historical peak of $3500 reached in April.
Overall, the gold market is currently caught in a tug-of-war between expectations of monetary policy easing and easing geopolitical risks, with technical indicators showing signs of consolidation and volatility. Investors are advised to closely monitor this week's inflation data and exercise caution until key levels are breached.
XAUUSD GOLD XAUUSD GOLD XAUUSD GOLD
However, gold bulls appear reluctant to make large bets, opting instead to await the latest US inflation data. This key data will provide fresh clues about the Fed's rate cut path, in turn impacting dollar demand and providing a substantial boost to gold prices. Meanwhile, the extension of the US-China trade truce and optimistic expectations for a US-Russia summit aimed at ending the war in Ukraine could pose bearish factors for gold.
Market Dynamics: Gold prices benefited from Fed rate cut bets, while US dollar demand remained subdued.
Gold prices fell sharply on Monday as easing geopolitical tensions weighed on traditional safe-haven assets. Investors are pinning high hopes on Friday's US-Russia summit, believing it will increase the likelihood of an end to the long-running Russia-Ukraine conflict. Furthermore, continued buying of the US dollar contributed to a sharp drop of approximately 1.65% in precious metals overnight.
Market participants are generally betting on a 25 basis point interest rate cut by the Federal Reserve in September, with at least two more by year-end. This expectation is bolstered by a recent string of disappointing US economic data, including the closely watched non-farm payroll report, which suggests the economy may be weakening.
However, traders are likely to refrain from making large directional bets, opting to wait and see ahead of US inflation data, which could provide further clues about the interest rate outlook.
The US Producer Price Index (PPI) will be released on Thursday, followed by US retail sales data and the Michigan Consumer Confidence Index on Friday. Furthermore, speeches by several key Federal Reserve (FOMC) officials will also influence the US dollar's short-term trajectory and provide significant support for gold prices.
On the trade front, US President Trump signed an executive order on Monday extending the US-China trade truce for three months, easing market concerns about a trade war between the world's two largest economies. Trump previously stated in a social media post that gold would not be subject to tariffs, but provided no further details.
Gold bears need to wait for a break below the key support level near $3342.
Technically, gold has successfully held the key support level of the 200-period SMA on the 4-hour chart, currently located in the $3344-3342 range. Given that oscillators on the chart are showing downward momentum, a break below this support level could drag gold towards the intermediate support level of $3315 and, subsequently, the $3300 mark. Any subsequent selling would be seen as a new trigger for short traders and pave the way for further declines in gold prices.
Conversely, a rebound above the $3358-3360 area could face strong resistance near $3380. A sustained break above this resistance level would allow gold to make another attempt to conquer the $3400 mark. A further break above last week's swing high of $3409-3410 would reverse the current bearish outlook and push gold prices towards testing the next key resistance level of $3422-3423. Upward momentum could extend to the strong horizontal resistance level of $3434-3435. A clear break above this resistance could challenge the historical peak of $3500 reached in April.
Overall, the gold market is currently caught in a tug-of-war between expectations of monetary policy easing and easing geopolitical risks, with technical indicators showing signs of consolidation and volatility. Investors are advised to closely monitor this week's inflation data and exercise caution until key levels are breached.
XAUUSD GOLD XAUUSD GOLD XAUUSD GOLD 
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Real-time strategies are like a beacon guiding your investment path. The market will never disappoint those who persevere and explore wisely....🚀🚀VIP Channel t.me/EagleEyePrecisionAnalysis
👉Exclusive address t.me/Eagle_PreciseAnalysis
👉Exclusive address t.me/Eagle_PreciseAnalysis
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.