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Bulls Have Broken through the Consolidation Range, but Technical Indicators Suggest a Limited Upside
Commodity
Economic
Summary:
Gold prices exhibited volatile trading today, influenced by U.S. inflation data and ongoing tariff developments. Although gold bulls broke through the consolidation range on Thursday, further significant gains are not anticipated.
Sell
CLOSEDXAUUSD
End Time
3358.87
Entry Price
3300.00
TP
3380.00
SL
3447.27 +30.40 +0.89%
1947
Points
Profit
3300.00
TP
3339.40
CLOSING
3358.87
Entry Price
3380.00
SL
Fundamentals
Data released on Tuesday revealed that the U.S. CPI figures for July closely aligned with expectations, encompassing both the headline inflation rate (month-over-month +0.19%, June +0.29%, forecast +0.2%) and the core inflation rate (month-over-month +0.32%, June +0.23%, forecast +0.3%). Notably, the modest uptick in core inflation was primarily driven by the services sector. This is often interpreted as a sign of rising inflationary stickiness, thus signaling a hawkish sentiment.
However, core goods and food inflation remained stable at moderate levels, alleviating market concerns regarding the rapid pass-through of tariff-related costs. The prevailing question is whether businesses will continue to absorb escalating costs or pass them on to consumers. While we do anticipate a further deceleration in core goods inflation, the data supports the rationale for a September rate cut by the Federal Reserve.
The implications for gold are intriguing, with the market initially experiencing an upward movement, followed by a daily low and a test of the critical US$3,331 support level. Given that the inflation data bolsters the case for a September rate cut by the Federal Reserve, a subsequent rally in gold prices is anticipated.
Technical Analysis
During the European session on Wednesday, gold prices breached the consolidation range of US$3,342-US$3358, indicating potential for further gains. However, this rally is driven by new long positions, and the market's upward movement is expected to be limited, as technical indicators still suggest a bearish trend.
A break below yesterday's low of US$3,331 is anticipated to lead to a decline towards US$3,321, with the subsequent support level at US$3,315, which would conclude this downward movement. If the prices continue to fall, the focus will shift to the new short-selling target of US$3,300.
On the upside, immediate resistance is at US$3,369, followed by US$3,380, a level whose breach would signal the definitive end of the bearish market.
Trading Recommendations
Trading Direction: Sell
Entry Price: 3365
Target Price: 3300
Stop Loss: 3380
Valid Until: August 28, 2025 23:55:00
Support: 3354, 3342, 3331
Resistance: 3369, 3375, 3380
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