Gold market analysis

"Gold Prices Form a Short-Term Descending Flag Pattern" 14/8/2025 10:00 AM Completed

Trump's intention to replace the chairperson of the Federal Reserve is evident. Yesterday, he reiterated that the federal funds rate has dropped to 1%, and Treasury Secretary Mnuchin echoed his sentiment, suggesting that the Federal Reserve might cut interest rates by 50 basis points (presumably at the September meeting). Additionally, regarding the next chairperson of the Federal Reserve, he stated that there are 10 to 11 candidates to replace Powell, whose term ends in May next year. Although Powell could still serve as a Federal Reserve governor, if he is not reappointed as the chairperson, it is believed that he will also resign from the position of governor. 

Current interest rate futures indicate that the probability of a 25 basis point rate cut in September is 99.9%, and the chance of another 25 basis point cut in October exceeds 70%, with a nearly 60% probability of a further 25 basis point reduction in December. However, the Federal Reserve is unlikely to cut rates by half a percentage point in September. Although non-farm payrolls increased by only 74,000 in July, they still rose rather than fell, and the U.S. stock market has continued to reach new highs. Therefore, the Federal Reserve has no reason to make a significant half-percentage-point rate cut. 

Yesterday, the spot gold price rose to the $3,370 level at the beginning of the US stock market opening, but then fluctuated and fell repeatedly. $3,370 was exactly the 50% retracement level of the biggest decline since August 8th. It was originally thought that after the gold price broke through $3,360, the upward trend could continue to the 61.8% retracement level near $3,380. However, the gold price yesterday showed a narrow range of fluctuations and oscillations, indicating that the gold price is still in a downtrend. 

Be cautious of a sudden drop in gold prices within the trading day. 

However, investors should note that gold prices dropped sharply on Monday with a large bearish candle, and on Tuesday, after testing the lower levels, they rebounded on the same day to close. But the cumulative rebound was only slightly more than half, indicating that the bears still dominate the gold price trend. In the early Asian session today, gold prices again attempted to break through the $3,370 level. Although the high approached $3,375, it still closed lower at the $3,369 level on the hourly chart. 

Preliminary judgment suggests that the gold price is forming a descending flag pattern. If so, it will gradually rise in the short term and may even challenge the $3,380 or $3,392 levels. However, it is unlikely to break through the resistance level of $3,405, which was set by the large bearish candle on Monday. Subsequently, the gold price is expected to sharply reverse and fall again with a large bearish candle, targeting the $3,300 mark. Conversely, if the gold price fails to break through and hold above $3,370 today, or if it challenges $3,380 but closes lower with a bearish engulfing candle on the hourly chart, then the gold price is likely to test $3,320 and $3,300 within the day. 

The above content is for reference only and does not constitute investment advice. 

MTF Special Analyst Zheng Guangfu