Gold prices are making a fresh attempt to reclaim ground above the $3300/oz mark following a selloff this week.
The selloff in Gold has been down to a combination of factors such as improved sentiment as trade deals were struck and a stronger US Dollar. The question now is whether this is the start of a larger correction or is the road still bumpy ahead?
Gold Prices Moving Forward
Golds continued back and forth over the past few weeks left market participants scratching their heads. However the recent price drop and trendline break have raised interest in the potential for further downside.
Gold buyers are still holding on, but the lower peak at 3435, below April’s high of 3500, suggests the rally might be losing steam after a 75% climb over 15 months.
The reason that bulls have remained buoyant thus far, comes from the fact that two previous attempts by bears to gain control saw the precious metal attract buyers en masse. This resulted in higher lows instead of the predicted lower lows which would go with the trend.
In May following a selloff from highs around $3500/oz support and buyers returned around the $3200/oz before a rally to $3433/oz. This was followed by a new lower low at $3122/oz which seemed to many that it could be the start of a longer term downtrend.
However, a rise in geopolitical risk saw a higher high posted instead of a lower high and this saw a two month period of mixed price action.
This begs the question, is the current drop the start of a longer move to the downside or more of the same?
US Dollar Recovery Gains Pace
There is a notable difference with the current rally though.
Firstly, Geopolitical risk has quietened down toward the background over the last 3 weeks which is not to say that it may not return. The Iran question remains open ended, with ongoing meetings and a potential regime change still being touted in many avenues of the media.
Should the situation escalate again, safe haven demand may return. For now though this avenue has led to a reduction of haven flows.
The US dollar has been bid of late as trade deal announcements appear to be aiding the US dollar. The rally in the DXY is now at a crucial point as tariffs kick in. The DXY is testing a crucial pivot level around the 100.00 mark, just ahead of today’s NFP data.
US Dollar Index (DXY) Daily Chart, August 1, 2025
A positive jobs number could add to optimism around the US economy. Whether this is misguided as some analysts have pointed out is irrelevant, what matters is what market participants are doing, and based on market moves it appears there is no doubt that confidence is growing around global growth and growth in the US during h2 2025.
If this picture persists through the month of August, Gold bulls could be in for a challenge. However, it is always important to remember that the situation has been fluid and ever evolving in 2025, so this is by no means set in stone.
For a full breakdown of the NFP data due later today, read August Non-Farm Payrolls preview
Technical Analysis – Gold (XAU/USD)
From a technical standpoint, Gold monthly candle close for July closed as a massive shooting star which hints at further downside ahead.
This also marked the first bearish monthly close since December 2024 and could be a sing of the shift in momentum between buyers and sellers.
Dropping down to a daily chart and as you can see below, we have broken below the triangle pattern where last week we had a false breakout to the upside.
The breakout to the downside has been followed by a significant push lower, with Wednesday seeing the precious metal lose about 1.55% and record its lowest daily close in just over a month.
However, yesterday we saw an inside bar bullish candle close as Gold found some support at the 100-day MA which is hovering around the $3270/oz handle.
If bulls are to make a move higher, acceptance above the $3300/oz handle is crucial with a daily candle close above this level needed for bullish momentum to return.
Immediate resistance rests at $3322, $3341 and $3350 respectively.
A move lower here will first need a clean break and daily candle close below the 100-day MA. This could open up the possibility of further downside toward support at $3243, $3200 and potentially the $3121 handle (which is the lowest price reached since the April all-time high of $3500/oz.
Gold (XAU/USD) Daily Chart, August 1, 2025
Client Sentiment Data – XAU/USD
Looking at OANDA client sentiment data and market participants are Long on Gold with 72% of traders net-long. I prefer to take a contrarian view toward crowd sentiment and thus the fact that the majority of traders are net-long suggests that Gold prices could continue to slide in the near-term.
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