Gold remains range-bound, awaiting direction

　　

　　

During the Asian session on Tuesday, XAU/USD weakened and retreated to around $4355, ending its previous two-day winning streak. The market’s reassessment of the Federal Reserve’s interest rate path has become the main factor putting pressure on gold. Last week, the Fed raised its policy rate by 25 basis points to a range of 3.75%-4.00%. Recent statements from officials indicate the decision-making body has not completely ruled out the possibility of further rate hikes. This has supported the US dollar and US Treasury yields, putting non-yielding gold under some pressure.

　　Expectations around Federal Reserve policy have become the core variable driving gold’s short-term movement. St. Louis Fed President Alberto Musalem stated on Monday that if inflation continues to exceed the target, monetary policy may still need to be tightened further. He also pointed out that after this month’s rate hike, US monetary policy’s stimulative effect on the economy may not have completely faded. These comments reinforced market expectations that "higher interest rates will last longer," further increasing the opportunity cost of holding gold.

　　

and US Treasury yields could remain relatively robust, thus limiting the room for a short-term rebound in gold. As for the structure of inflation, the market’s focus has now shifted from just energy price shocks to pressure on the demand side. Musalem believes that inflation is still greatly affected by strong demand and price shocks of major commodities outside energy, with the underlying inflation level remaining relatively high. This means that even if some energy supply concerns ease, the pace of inflation decline may still lag policymakers’ expectations, prompting the Fed to maintain a tight policy stance.

　　However, gold is not completely lacking in fundamental support. Improvement in Middle East diplomatic prospects and easing energy supply concerns may reduce some safe-haven demand for gold, but if geopolitical circumstances change, gold’s safe-haven appeal could quickly bounce back. In addition, gold ETF holdings are currently near six-month highs, and continued buying by global central banks provides medium- to long-term support for gold demand. In the context of a strengthening dollar, these factors help to limit the downside for the gold price.

　　

　　From a daily chart perspective, gold has now pulled back to around $4365, just below the middle band of the 20-day Bollinger Bands, but still clearly above the 100-day simple moving average. Therefore, the medium-term bullish structure remains unbroken. The RSI is around 49.95, in the neutral range, indicating more of a consolidation at high levels rather than an extreme oversold state. For the short term, key support is first at the 100-day moving average near $4320. If this level holds, gold still has a chance to maintain its medium-term consolidative bullish structure; below that, focus on the lower Bollinger Band at around $4200. On the upside, focus first on the middle band near $4405. If this is broken to the upside, the price may further test the upper Bollinger Band near $4615.

　　On the 4-hour chart, after a recent rally, gold prices have pulled back, and short-term momentum has weakened, with the market re-entering a choppy adjustment phase. The area near $4360 is a key battleground at current prices. If the price regains the $4400 to $4405 area, short-term rebound momentum is expected to recover and push towards higher resistance; otherwise, if $4360 breaks, focus should shift to support at $4320. Should $4320 be broken, the space for a short-term correction may widen further. Overall, while the dollar and Fed rate hike expectations remain strong, gold still faces short-term pressure, but as long as support near the 100-day moving average holds, the medium-term trend does not yet show clear signs of deterioration.

　　Editor’s Summary

　　Gold is currently caught in a game between Fed tightening expectations and medium- to long-term demand support. Strengthened rate hike expectations have pressured gold prices in the short term through the dollar and interest rates, but ETF holdings, central bank buying, and potential safe-haven demand still provide some underlying support. Looking ahead, the core drivers for the market will be US inflation, statements by Fed officials, movements in the dollar, and US Treasury yields. Technically, $4405 is an important level for a renewed short-term uptrend, while $4320 is a key level to determine if the medium-term structure is weakening further.

Editor: Zhu Henan