Upside Momentum Encounters Resistance, Gold Could Soon Resume Its Downtrend

Summary:

The U.S. July nonfarm payrolls report unexpectedly weakened last Friday, significantly cooling market expectations for a September rate hike by the Federal Reserve. This prompted spot gold to resume its upward move and decisively reclaim the $4,300 level, marking its largest weekly gain since late January. Although the medium- to long-term bullish structure remains intact, the risk of a short-term pullback is rapidly increasing as gold approaches the previous major resistance zone around $4,380.

SELL XAUUSD

EXP

PENDING

4410.00

Entry Price

4050.00

4580.00

4398.38 +8.62 +0.20%

Pips

PENDING

4050.00

Exit Price

4410.00

Entry Price

4580.00

Fundamental

The U.S. July nonfarm payrolls report released last Friday showed an unexpected sharp deterioration, highlighting renewed weakness in the labor market. The disappointing employment data directly reduced market expectations for further hawkish Fed tightening this year, triggering a sharp rally in gold prices.

Cooling Rate-Hike Expectations:The weaker-than-expected employment data has made markets more cautious about pricing a September rate hike, prompting capital to flow more rapidly into gold and other inflation-hedging and safe-haven assets.

Focus Shifts to CPI:Despite the weakness in the labor market, energy prices driven by tensions in the Middle East continue to create uncertainty around the inflation outlook. Markets are now closely watching the U.S. July CPI report due next week for clearer signals regarding the Federal Reserve's next monetary policy move.

Upside Momentum Encounters Resistance, Gold Could Soon Resume Its Downtrend_1

Technical Analysis

The technical structure shows that gold quickly stabilized and resumed its upward move after a brief period of consolidation. Prices not only reached a three-week high but also established a firm foothold above the psychological $4,300 level.

Upside Potential and Resistance:Following the confirmed breakout above $4,300, the short-term bullish target is now around $4,380, which corresponds to the swing high formed in mid-June. A decisive breakout above $4,380 accompanied by stronger trading volume would further reinforce the medium-term bullish structure and open the door to a broader upside move.

Short-Term Overbought Conditions and Structural Risks:After a series of sharp gains, gold is approaching the previous major high-volume trading zone, where profit-taking pressure is likely to increase significantly. Although momentum indicators remain in expansion mode, the rapid one-way rally lacks a solid consolidation base underneath it. If the upcoming inflation data triggers a hawkish market interpretation, leading to a rapid rebound in the U.S. dollar and Treasury yields, gold could be vulnerable to a sharp pullback from elevated levels.

Trading Strategy

Direction: Sell

Entry: 4,410

Target: 4,050

Stop Loss: 4,580

Strategy Valid Until: September 9, 2026, 23:55

Support: 4,304, 4,255, 4,222

Resistance: 4,330, 4,350, 4,384

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