Gold has experienced further losses due to hawkish interest rate expectations following strong US economic data. The recent FOMC meeting was not as dovish as anticipated, contributing to a bearish outlook. The expectation for increased interest rates is unfavourable for the market.
Gold’s potential for upward movement is limited due to the absence of bullish catalysts and the pressure from interest rate expectations. The upcoming US Non-Farm Payroll (NFP) report could influence gold prices; soft data may boost gold, while strong figures might intensify bearish momentum. In the long-term perspective, gold is expected to maintain an upward trend as real yields are predicted to decline with Fed easing.
Technical Analysis
On the daily chart, gold prices are nearing a support level around 3,245. Buyers might emerge at this level, with risks defined below, aiming for a rally back to resistance. Conversely, sellers aim for a break below this support to increase bearish activity towards 3,120.
The 4-hour chart shows a downward trendline, guiding the bearish trend. Sellers are likely to rely on this trendline to push prices lower, while buyers will aim for a break above it to target the 3,333 swing point and potentially rally to 3,438 resistance.
On the 1-hour chart, the focus remains on the trendline, with sellers anticipating rejection and buyers aiming for a breakout. Upcoming US economic reports could further impact gold’s movement.
Market Expectations
As of today, July 31, 2025, gold has extended its losses due to strong US economic data, which is pushing back expectations for interest rate cuts. For example, today’s Personal Consumption Expenditures (PCE) price index showed core inflation holding at a firm 2.9% year-over-year, resisting a faster decline. This reinforces the hawkish sentiment from the Federal Reserve, making it difficult for gold to rally in the immediate term.
All eyes are now on tomorrow’s Non-Farm Payrolls (NFP) report for August 1, 2025, which will be critical. Given that initial jobless claims have remained low, averaging around 230,000 recently, another strong jobs report could send gold breaking below key support. Derivative traders might consider buying puts or selling short-dated call options to hedge or speculate on a move down towards the $3,120 level.
For those with a bearish outlook, the downward trendline on the 4-hour chart remains the key guide. We believe selling futures with a defined stop-loss above this trendline is a viable strategy for the coming days. A decisive break below the $3,245 support level would likely trigger further selling pressure.
Conversely, the $3,245 level represents a significant support zone where buyers could step in. A trader looking for a reversal might buy call options with a near-term expiration date, using a break of this support as a clear signal to exit the position. A bounce from this level would first target the swing point at $3,333.
Despite the short-term pressure, we remember the pattern from late 2023 and 2024, where hawkish holds from the Fed eventually gave way to easing. The broader expectation is still for falling real yields, which will ultimately support gold. Therefore, using these dips to purchase longer-dated call options, like those expiring in early 2026, could be a prudent way to position for the eventual uptrend.
