Beware of Corrections Before They Strengthen Again
The Federal Reserve is expected to maintain its interest rate range at 4.25–4.50% at the end of this month, with signals that easing may occur in the fourth quarter of 2025. Meanwhile, the US dollar has shown slight strength, which generally supports gold prices because the metal is priced in dollars.
The approaching trade deal in early August is also a strong reason why gold is moving away from its record high. After Japan, the European Union is also expected to reach a trade agreement with the US, imposing a 15% tariff on the European Union, leading many analysts and economists to predict that August will be the end of the US trade war with its trading partners.
The trend of lower-than-expected jobless claims in recent weeks has strengthened expectations that the Federal Reserve (Fed) will maintain high interest rates. This supports US government bond yields and the US dollar, both of which are typically bearish for non-yielding assets like gold.
Meanwhile, the S&P Global Purchasing Managers' Index (PMI) data for July showed mixed sector performance. The Manufacturing PMI fell sharply to 49.5, entering contractionary territory and missing the 52.5 estimate. Conversely, the Services PMI surged to 55.2 (compared to the 53.0 estimate), pushing the Composite PMI to 54.6 from 52.9, indicating strong growth in the services sector. Against this backdrop, the market is increasingly considering the prospect of a more stable global trade environment.
According to the CME FedWatch Tool, the market is pricing in a 60% chance of an interest rate cut in September, with a 38% probability that rates will remain unchanged at the same meeting.
Gold is currently in a strong but cautious technical position. Fundamentally, this precious metal remains sought after as a hedge against global uncertainty and expectations of interest rate easing. However, technically, the market is still awaiting confirmation of a breakout or breakdown. Traders and investors are advised to pay attention to key levels and adjust their strategies accordingly.
Technical recommendation: If the price breaks above $3,400, the next target could be $3,525–3,600. However, if it fails to hold above $3,300, it could drop to $3,245 or even $3,120.
Source: Newsmaker.id
