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Gold is attempting to recover its upward momentum, partially offsetting the previous day's losses, but the market remains uncertain about further movement. The U.S. dollar is exerting a favorable influence on prices, attracting new sellers despite Thursday's stronger-than-expected Producer Price Index (PPI) data. Traders believe the Federal Reserve could resume its rate-cutting cycle as early as September, which supports renewed demand for gold.
According to CME Group's FedWatch tool, there is a probability of two Fed rate cuts of 25 basis points each before the end of this year. Such expectations limit further U.S. dollar strength and create favorable conditions for gold price growth. At the same time, the latest rise in inflation expectations has reduced the likelihood of more aggressive monetary policy easing by the Fed.
However, the prevailing risk-on sentiment in markets is capping significant gains in this safe-haven asset. The extension of the U.S.–China tariff truce for another three months has eased concerns about a potential full-scale trade war between the world's two largest economies. This has strengthened investor confidence and maintained positive sentiment across financial markets.
Additionally, hopes for resolving the protracted conflict in Ukraine at the upcoming Friday U.S.–Russia summit are further supporting optimism. These developments create a favorable backdrop for risk assets, which in turn limits gold's ability to advance.
It would therefore be prudent to wait for more substantial buying interest before confirming that gold prices have bottomed.
The lack of strong buying indicates that the current trend remains bearish and that the path of least resistance is still to the downside. In this environment, any subsequent gold price rebound could be viewed as a selling opportunity, as it may quickly lose momentum and revert to the prevailing downtrend. Buyers are advised to remain cautious.
Today, traders should focus on key U.S. economic releases for potential opportunities: monthly retail sales data, the Empire State Manufacturing Index, and the University of Michigan Consumer Sentiment Index along with inflation expectations.
From a technical perspective, repeated failures to break above the 100-hour simple moving average (SMA) and the 200-hour SMA favor the bears. Hourly chart oscillators remain in negative territory, while on the daily chart the Relative Strength Index has only begun to trend lower, reinforcing the short-term bearish outlook. Consequently, any recovery attempt is likely to remain capped near the 100-hour SMA, currently around 3353 dollars. If this level is breached, gold could retest yesterday's high at 3375 dollars, with the 200-hour SMA as the next obstacle. This momentum could extend toward the key psychological level of 3400 dollars.
On the other hand, the 3330 level, which marks Thursday's two-week low, serves as immediate support. Renewed selling could expose gold to a sharper drop toward the 3300 level. A sustained break below this level would confirm the short-term bearish bias and open the way for further declines.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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