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Another Failure at Resistance May Lead to a Bearish Reversal
Economic
Commodity
Summary:
If the price action fails to break above 3355 and shows rejection at this resistance, a bearish correction could unfold from current levels.
Sell
PENDINGXAUUSD
EXP
3365.00
Entry Price
3312.00
TP
3395.00
SL
3355.58 +31.77 +0.96%
--
Point
PENDING
3312.00
TP
CLOSING
3365.00
Entry Price
3395.00
SL
In the second quarter of the year, net gold purchases by ETF investors totaled 170 tonnes, pushing the total to 397 tonnes in the first half of 2025. According to the World Gold Council (WGC), this marked the strongest first-half inflow into gold ETFs in five years. These inflows played a key role in propelling gold to a record high in April, reinforcing its safe-haven appeal amid geopolitical and economic uncertainty.
However, recent weeks have seen the influence of ETF buying on gold prices begin to fade, suggesting that the bullish driver from institutional flows may be losing steam, at least in the short term.
Adding fuel to gold’s safe-haven demand, U.S. President Donald Trump announced a 35% tariff on Canadian imports, effective August 1. This move follows a series of more than 20 similar tariff notices issued by Trump since the start of the week, including a separate 50% tariff on U.S. copper imports announced last Wednesday. The flurry of aggressive trade measures has pushed investors toward safe assets such as gold.
Minutes from the Federal Reserve’s June 17–18 policy meeting revealed that most policymakers remain concerned about upside inflation risks, largely driven by Trump’s escalating trade policies. While only a few officials supported the idea of a rate cut as early as this month, the hawkish tone helped the U.S. dollar hold near a two-week high recorded on Thursday.
On the economic front, the U.S. Department of Labor reported that initial jobless claims fell to 227,000 for the week ending July 5, better than expected and below the prior revised reading of 232,000. Combined with last week’s stronger-than-expected U.S. employment data, this supports the view that the labor market remains robust and removes urgency for immediate rate cuts from the Federal Reserve.
Meanwhile, San Francisco Fed President Mary Daly noted that monetary policy remains restrictive and that the time may be approaching to consider adjusting rates. She added that while tariffs are not as severe as previously anticipated, underlying economic fundamentals could justify lower rates in the near future.
Separately, Fed Governor Christopher Waller stated that the inflationary effects of tariffs are likely to be short-lived, emphasizing that any decision to cut rates would not be politically motivated. Waller, seen as a potential successor to Fed Chair Jerome Powell in 2026, reiterated his call for a potential rate cut as early as July.
Technical Analysis
XAUUSD has climbed to retest the 3366 level—a local high that has acted as strong resistance on two recent occasions. The price also tapped this area on July 2, triggering a sharp downside move from that level. A similar reaction this time around could once again lead to a correction toward the next local support around 3310.
On the 4-hour chart, the 100-period and 200-period moving averages are positioned at 3329 and 3340 respectively. Although price action remains above both moving averages, the RSI has risen to 67, nearing the overbought threshold. Notably, this RSI surge has been steeper than in the previous upswing, which could indicate waning bullish momentum.
If the price action fails to break above 3355 and shows rejection at this resistance, a bearish correction could unfold from current levels. However, if XAUUSD manages to close convincingly above 3366, the bullish trend may be reignited, opening the door for further upside.
Trading Recommendations
Trading direction: Sell
Entry price: 3365
Target price: 3312
Stop loss: 3395
Validity: Jul 22, 2025 15:00:00
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