Gold market analysis

"Gold prices are expected to remain in a range-bound pattern in the short term." 26/8/2025 9:32 Completed. 

Yesterday, the gold price fluctuation narrowed significantly, with the high-low range being just over 16 dollars. As seen from the hourly chart, the gold price bottomed out at 3326 dollars in the early New York session and then rebounded. Before the New York midday, it reached a high of 3376 dollars. However, it failed to break through the high of last Friday and instead turned downward. In the early Asian session today, it dropped to 3354 dollars, slightly testing the 38.2% retracement level of the biggest increase since last Friday. Although the gold price later rose sharply to 3386 dollars, it soon returned below 3380 dollars. 

Employment data influence monetary policy. 

Even though the Federal Reserve is highly likely to cut interest rates in September, there are still more than three weeks until the interest rate meeting. During this period, the economic data released by the United States still leaves room for uncertainty at the end of the meeting next month. In particular, the August non-farm payroll report to be released on September 5 and the August CPI to be released on September 11 are both important considerations for the Fed's monetary policy decisions. However, the non-farm payroll report is more closely watched. If the number of new jobs remains below 100,000, it is almost certain that the Fed will cut interest rates in September. 

Currently, interest rate futures suggest that the Federal Reserve is more likely to keep interest rates unchanged in October and cut them by 25 basis points in December. Additionally, the Federal Reserve will release its latest economic projections after the September interest rate meeting, including its views on the economy, inflation, and employment. The economic projections released by the Federal Reserve in June indicated that the median federal funds rate is expected to be 3.6% and 3.4% in the next two years, higher than the 3.4% and 3.1% projected in March, with a long-term target of 3%. In other words, regardless of when the Federal Reserve resumes cutting interest rates, under normal circumstances, there is only a maximum of 1.5% room for rate cuts. Due to the limited "ammunition", the Federal Reserve cannot significantly cut interest rates when the inflation rate has not reached the target, which may lead to the need for significant rate hikes in the future to suppress inflation. Therefore, even if there is a rate cut in September, it does not mean that there will definitely be further rate cuts at future meetings. 

This week, it is expected to fluctuate between 3320 and 3380. 

With expectations of a rate cut in September, gold prices lack a strong reason to fall sharply. Moreover, a significant decline would attract capital inflows, which is unfavorable for short sellers. Conversely, as the Federal Reserve will not hold its interest rate meeting until mid-September, even if gold prices rise sharply now to reflect the upcoming rate cut, it is difficult for them to remain at a high level. Therefore, in the short term, the key support levels for gold prices are $3,350 and $3,343. The broader range of fluctuation is expected to be between $3,320 and $3,380, and it is highly likely that the prices will fluctuate within this range this week. 

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

MTF Special Analyst Zheng Guangfu