Gold Analysis: Downtrend Dominates the Market, How to Predict the Next Price Targets?

Currently, the gold market is facing multiple short-term bearish pressures, with core influencing factors including expectations for a Fed rate hike, a strong dollar, and sluggish capital inflows into the market. Several authoritative institutions have updated their market forecasts; both Deutsche Bank and Bank of America Global Research have revised their outlook reports, confirming that the Fed is very likely to start raising rates in September.

At last week's Fed policy meeting, a hawkish signal was released suggesting further tightening of monetary policy within the year. Fed chairman Kevin Walsh reiterated the central bank's commitment to bringing inflation back down to the 2% target, significantly strengthening market expectations for rate hikes and providing robust support for a stronger dollar. In addition, the U.S. Purchasing Managers’ Index (PMI) data for June was entirely positive: S&P Global Service PMI climbed from 50.7 in May to 51.3, and the Manufacturing PMI from 55.1 to 55.7. Both figures beat market expectations, demonstrating the resilience of the U.S. economy and further solidifying the basis for the Fed’s tightening.

Currently, market expectations have been slightly adjusted. The Chicago Mercantile Exchange (CME) FedWatch tool shows the probability of a rate hike by the Fed in September is priced at 70% (down from the prior 90%). Meanwhile, the market still expects another rate hike by the Fed next year, with focus shifting to this week’s U.S. Personal Consumption Expenditure (PCE) inflation data and the final Q1 GDP figures, which will further guide the Fed’s policy path.

From a long-term trend and low support perspective, the latest weekly market monitoring report by the World Gold Council gives a clear forecast: if the U.S. Dollar Index remains firmly above the 100 mark, gold’s downward trend will likely continue with a high probability of breaking under the psychological $4,000 threshold. Subsequent key supports are lined up at the $3,887–$3,857 range (corresponding to the 38.2% Fibonacci retracement of this round of gold’s upward rally, a key potential bottoming area); if bearish pressure continues and the market weakens further, the next major support will fall at the October 2025 high of $3,500.

Trading Recommendations

Editor: Guo Jian