On Wednesday, July 29, during the Asian morning session, spot gold traded in a narrow range near a low, currently at $4,027.38 per ounce.
Under pressure from a strong U.S. dollar and expectations of a Federal Reserve interest rate hike, gold prices fell to a one-week low of $4,011.54 per ounce on Tuesday, with spot gold closing at $4,028. The market is focused on Wednesday's decision, with a 75% probability of a September rate hike. Recurring tensions in the Middle East are pushing oil prices higher, while Commerzbank has lowered its year-end target to $4,500. Gold is under short-term pressure, but its safe-haven appeal remains in the medium to long term.
Fundamental Factors
The decline in precious metal prices is primarily driven by expectations of monetary policy shifts. On one hand, in the lead-up to the Federal Reserve’s meeting, expectations for a July rate hike have intensified, pushing the U.S. Dollar Index to a near one-month high, directly pressuring dollar-denominated gold and silver prices. On the other hand, the significant uncertainty surrounding the outcome of this meeting has prompted some funds to actively reduce directional exposure, triggering short-term long profit-taking and technical selling. Silver, which possesses both financial and industrial properties, has higher price elasticity than gold, leading to a more pronounced correction.
Gold Price Technical Analysis
On the daily chart, gold prices have been declining from the year's dual highs, with a series of lower highs. This represents a deep correction after a sizable uptrend, but the weekly-level medium-term bullish trend has not completely reversed. The price is currently trading steadily below the 5-day and 10-day moving averages, which form a bearish resistance band. Each rally towards these averages is met with selling pressure, creating a strong intraday resistance zone. The MACD indicator shows a green bar (bearish momentum) is continuously contracting, indicating that the persistent downward momentum is gradually weakening. The RSI has fallen to around 29, entering the oversold zone, which suggests a technical need for a corrective bounce. However, without a bullish catalyst, any rebound will be a weak, sideways consolidation, rather than a full trend reversal.
From a chart perspective, the key psychological support is the $4,000 level. A break below this level would open the door for a decline towards the medium-term support zone of $3,945-$3,970. On the upside, resistance is layered. The first short-term resistance is at $4,060. A break above this level would be needed to alleviate bearish pressure. The $4,100 level is the crucial pivot point for this correction; a firm hold above this level would signal the end of the correction and a return to the bullish trend. The ultimate resistance is the previous high range of $4,130-$4,160.
On the 4-hour chart, gold is trading entirely within a downward channel. The Bollinger Bands are contracting downwards, and the price is consistently below the middle band, which aligns with the 5-day moving average on the daily chart, creating a strong resistance congestion area. The short-term moving averages are in a bearish alignment, suggesting that the price will face resistance at the MA20 line, making it a key reference for bearish positions today. The indicators are in sync with the daily timeframe. The MACD is below the zero line, confirming the bearish structure, but the green bars are contracting, showing weakening momentum. The KDJ indicator is at low levels, showing a potential for a short-term bounce. However, until the Fed decision is announced, any technical bounce will be limited, and the price is likely to retest support after a minor rally.
On the hourly chart, the weak 4-hour structure is reflected as a narrow consolidation pattern. After a sharp decline overnight, the Asian session is maintaining a low-level consolidation, with very weak upward momentum. The Bollinger Bands are completely flat and contracting, compressing the range to $4,000-$4,065. The price is fluctuating within this range. The short-term moving averages are intertwined, showing no clear directional signal, suggesting a temporary balance of power. The indicators are in a low-level idling state, and without a news catalyst, there is unlikely to be a breakout. The overall intraday sentiment is for a weak, oscillating decline. A clear directional trend is likely to only emerge after the Fed's decision in the early hours, which will provide the catalyst to break the current horizontal range and start a new trend.
Overall Outlook
The broader daily and 4-hour charts maintain a bearish correction structure, with a weakening downward momentum that points to a potential technical bounce. On the short-term hourly chart, the price is stuck in a narrow sideways range, with a stalemate between buyers and sellers. Before the decision, the approach should be to treat the market as a range-bound trade, avoiding chasing breakouts. Only after support or resistance is decisively broken should one follow the trend. The specific intraday trading strategy (for reference only, not investment advice) is as follows:
1. Short-term bearish setup: Sell on a bounce to the $4,055-$4,060 resistance zone, with a stop-loss above $4,075. The first target is $4,020, and the second target is the $4,000 level.
2. Long-term bullish setup for a correction: After a pullback and stabilization in the $4,000-$4,010 range, one can cautiously enter a long position, with a stop-loss below $3,990. The first target is $4,045, and a break above would target the $4,060 resistance.