Bulls Have Broken through the Consolidation Range, but Technical Indicators Suggest a Limited Upside

Commodity

Economic

Summary:

Gold prices exhibited volatile trading today, influenced by U.S. inflation data and ongoing tariff developments. Although gold bulls broke through the consolidation range on Thursday, further significant gains are not anticipated.

SELL XAUUSD

Close Time

CLOSED

3358.87

Entry Price

3300.00

3380.00

4197.91 -9.26 -0.22%

194.7

Pips

Profit

3300.00

3339.40

Exit Price

3358.87

Entry Price

3380.00

Fundamentals

Data released on Tuesday revealed that the U.S. CPI figures for July closely aligned with expectations, encompassing both the headline inflation rate (month-over-month +0.19%, June +0.29%, forecast +0.2%) and the core inflation rate (month-over-month +0.32%, June +0.23%, forecast +0.3%). Notably, the modest uptick in core inflation was primarily driven by the services sector. This is often interpreted as a sign of rising inflationary stickiness, thus signaling a hawkish sentiment.

However, core goods and food inflation remained stable at moderate levels, alleviating market concerns regarding the rapid pass-through of tariff-related costs. The prevailing question is whether businesses will continue to absorb escalating costs or pass them on to consumers. While we do anticipate a further deceleration in core goods inflation, the data supports the rationale for a September rate cut by the Federal Reserve.

The implications for gold are intriguing, with the market initially experiencing an upward movement, followed by a daily low and a test of the critical US$3,331 support level. Given that the inflation data bolsters the case for a September rate cut by the Federal Reserve, a subsequent rally in gold prices is anticipated.

Bulls Have Broken through the Consolidation Range, but Technical Indicators Suggest a Limited Upside_1

Technical Analysis

During the European session on Wednesday, gold prices breached the consolidation range of US$3,342-US$3358, indicating potential for further gains. However, this rally is driven by new long positions, and the market's upward movement is expected to be limited, as technical indicators still suggest a bearish trend.

A break below yesterday's low of US$3,331 is anticipated to lead to a decline towards US$3,321, with the subsequent support level at US$3,315, which would conclude this downward movement. If the prices continue to fall, the focus will shift to the new short-selling target of US$3,300.

On the upside, immediate resistance is at US$3,369, followed by US$3,380, a level whose breach would signal the definitive end of the bearish market.

Trading Recommendations

Trading Direction: Sell

Entry Price: 3365

Target Price: 3300

Stop Loss: 3380

Valid Until: August 28, 2025 23:55:00

Support: 3354, 3342, 3331

Resistance: 3369, 3375, 3380

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Alan

Forex

Summary:

The British pound faces downside risks stemming from domestic growth and employment, which limit its upside potential. Meanwhile, the New Zealand dollar is supported by expectations of a rebound in domestic inflation.

SELL GBPNZD

Close Time

CLOSED

2.26456

Entry Price

2.22800

2.27800

2.30779 -0.00476 -0.21%

134.4

Pips

Loss

2.22800

2.27800

Exit Price

2.26456

Entry Price

2.27800