Gold market analysis

"Objective Conditions Hinder Gold Price Rebound" 31/7 09:46 am Completed

Yesterday, the gold price continued to decline. Although it closed at $3,332 on the hourly chart, bulls did not dare to take advantage of the small victory to attack. After the New York market opened, the gold price dropped sharply as ADP announced that the number of new jobs in the private sector in July reached 104,000, exceeding the expected 77,000. The lowest point was only slightly below $3,389. After that, it gradually rebounded and rose to nearly $3,305 before the Federal Reserve announced the interest rate decision. However, after the authorities announced that the interest rate would remain unchanged, the gold price dropped sharply again, reaching a low of around $3,268. 

The September interest rate decision will still depend on the data. 

The Federal Reserve kept the target range for the federal funds rate at 4.25% to 4.5%, but two board members, Waller and Bowman, supported a rate cut. This was the first time in 30 years that a board member dissented. At the press conference, Fed Chair Powell pointed out that the current policy stance is in a favorable position and that the September meeting will need to rely on data to make a decision. Regarding inflation, it is expected that the core PCE will rise by 2.7% year-on-year in June, and the overall PCE will increase by 2.5%. Most long-term inflation expectations indicators are in line with the target, but they are further from the target than the employment data and are expected to be more affected by additional tariffs. 

In addition, the authorities believe that the labor market remains in a balanced state, but there are clearly downside risks. Although the economic performance is solid, indicators show that growth is slowing down. At the same time, they do not think that the Big and Beautiful Act has particularly stimulated economic growth. As for the impact of tariffs, the authorities believe that most of the estimates of effective tariffs have not changed much. It is reasonable to infer that the impact of tariffs on inflation is short-term, and three or four tenths of core inflation may come from tariffs. It is too early to assess its impact now. 

Gold price rebound stalls at $3,305. 

From the daily chart, gold prices have closed below the 50-day SMA (3342) for four consecutive trading days, and the 20-day SMA (3340) has also fallen below the 50-day SMA. The bearish signals are increasing. Calculated by breaking through the TD ascending channel, the downside target is approximately $3,225; measured by the Fibonacci 100% extension, the downside target is approximately $3,235. It is expected that the 20-day and 50-day SMAs will become the main resistance for a medium-term rebound. Even if gold prices return above the two moving averages, it is at most a return to a sideways range rather than a re-strengthening. It is believed that only when gold prices break through and hold above $3,500 will the bears be willing to surrender! 

Gold prices are expected to remain under heavy selling pressure in the short term. The first key resistance level for the day is at $3,305. Measured from yesterday's high of $3,334.19 using Fibonacci expansion, if the decline reaches 100%, the target would be $3,225. Under the current circumstances, it is difficult for gold prices to stage a rebound. The possibility of testing $3,225 has increased significantly. At that point, gold prices will fall below the June 30 low of $3,235.33, and the trend will turn downward. 

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

MTF Special Analyst Zheng Guangfu