Gold held above $4,000, with XAU/USD around $4,035 and little changed from Friday, though it slipped on Monday after opening with a bullish gap. Oil retreated as Middle East tensions eased: WTI hovered near $78 versus roughly $85 at last week’s close. The US dollar fell early then reversed and firmed across FX, supported in US hours by the ISM Manufacturing PMI, which rose to 55.6 in July from 53.3 in June and beat the 54 consensus. Attention now turns to US jobs data, with JOLTS Job Openings and the ADP Employment Change survey due ahead of Friday’s July NFP report.
Technically, the near-term tone stayed neutral-to-bearish. On the 4-hour chart, price sat below the 20-period SMA at $4,065.14, the 100-period SMA at $4,053.24 and the 200-period SMA at $4,075.53; Momentum was below its midline while RSI hovered around 43. The daily view echoed that setup: the 20-day SMA was $4,060.40, the 14-day RSI read 44.86 and the 14-day Momentum remained neutral. Resistance is seen at $4,053.24, then $4,065.14 and $4,075.53, while support lies at $4,000 and the June low of $3,941.
Trading Strategy and Key Levels
We recommend that derivative traders adopt a cautious, sell-on-strength approach as gold struggles to hold its ground just above the psychological $4,000 threshold. With XAU/USD trading below its key moving averages, including the 20-day Simple Moving Average at $4,060.40, the path of least resistance remains downward. We should look to establish short positions on temporary rebounds toward the $4,053 resistance zone, keeping tight stop-losses just above the 200-period SMA of $4,075.53.
Macro Drivers and Downside Risks
Our bearish outlook is reinforced by the surprisingly strong US ISM Manufacturing PMI, which jumped to 55.6 in July from 53.3 in June. Historically, a robust US manufacturing sector bolsters the US dollar, which typically exerts downward pressure on non-yielding assets like gold. We must closely monitor this week’s upcoming US labor data, including the Nonfarm Payrolls, as another strong report could quickly push gold below the critical $4,000 support level.
While geopolitical tensions in the Middle East previously drove gold to these historic highs above $4,000, the sudden easing of these conflicts is rapidly removing the metal’s safe-haven premium. Over the last few years, central bank buying—which reached a near-record 1,037 tonnes in 2023 and remained robust through 2024—heavily supported gold’s upward trajectory, but a shift back to high-yielding dollar assets could trigger a deeper correction. If the $4,000 level fails to hold in the coming weeks, we should target the June low of $3,941 as our next major downside objective.
