Gold Consolidates in the Short Term, Facing Directional Choice

Summary:

XAU/USD previously broke above the upper rail of the inner tunnel and initiated an upward push. However, whether it can achieve an effective handoff and regain a firm footing in the inner tunnel support zone remains to be further observed.

SELL XAUUSD

EXP

EXPIRED

4446.58

Entry Price

4337.32

4521.77

4038.84 -21.07 -0.52%

Pips

EXPIRED

4337.32

4353.77

Exit Price

4446.58

Entry Price

4521.77

Fundamental Analysis

Spot gold edged up after today's open and is currently hovering around 4420. The current core market logic has shifted from pure geopolitical safe-haven demand to deep pricing of the Fed's restored monetary policy independence and the reshaping of US dollar credibility.

The ADP weekly employment report showed that average job gains stood at 12,000 in the four weeks ending August 22. Although this marks a mild recovery from the previous reading, it remains well below June levels, reflecting weak hiring momentum. However, inflation stickiness remains significant, with core PCE staying high. Combined with mortgage rates rising to a 14-month high of 6.85%, higher borrowing costs have pushed up real interest rate expectations. Earlier, August non-farm payrolls increased by 162,000, far exceeding expectations, which briefly drove the probability of a September rate hike above 60% and put pressure on gold prices.

Furthermore, Fed Chair Warsh's post-appointment push for "de-forward-guidance" reforms—emphasizing balance sheet contraction to preserve dollar credibility—undoubtedly highlights his hawkish stance. With tightening US dollar liquidity and rising real interest rates, gold prices face medium-term adjustment pressures.

Although net gold purchases of 289 tonnes by global central banks in Q2 and geopolitical conflicts (such as US-Iran tensions) provide floor support for gold, its financial attributes are suppressed under the strong-dollar return cycle led by Warsh. This week's upcoming CPI data will be key to breaking the current deadlock; a rebound in inflation figures would further strengthen Fed tightening expectations, weighing on gold and benefiting the dollar.

Technical Analysis

On the daily chart, XAU/USD is currently in a range-bound rebound phase following a large-cycle high-level retracement. Prices have pulled back after a strong rally and are currently testing support at the inner tunnel (EMA144/169) and the 0.5 Fibonacci retracement level, showing signs of stabilizing for a rebound. Key downside support lies in the 4352–4368 area where the inner tunnel (EMA144/169) sits, as well as near 4336 (horizontal support level). A break below this level would trigger a new wave of decline toward the outer slow tunnel (EMA288/338, around 4102–4188) and the 0.618 Fibonacci retracement level. Key upside resistance is located at 4723.93, a resistance zone combining the 0.382 Fibonacci retracement level and previous rebound highs. XAU/USD previously broke above the upper rail of the inner tunnel and launched an upward push; however, whether it can achieve an effective handoff and regain a firm footing in the inner tunnel support zone remains to be further observed.

In terms of indicators, within the dual-tunnel system, the inner fast tunnel formed by EMA144 (4368.470) and EMA169 (4352.633) is running above the outer slow tunnel formed by EMA288 (4188.816) and EMA338 (4102.554), with both tunnels maintaining a gentle upward slope. This indicates that the medium-to-long-term bullish trend for XAU/USD remains solid. Although the current candlestick (at 4414.85) rapidly pulled back from high levels to test the inner tunnel's upper rail—reflecting short-term pressure from profit-taking—considering that the underlying EMA144/169 tunnel forms a dense confluence of support with the 0.5 Fibonacci retracement level (around 4494) and the 4336 horizontal support line, XAU/USD may complete a range-bound shakeout and stabilize near the inner tunnel (4350–4400 range) before starting a new wave of upward rebound. Gold Consolidates in the Short Term, Facing Directional Choice_1

Gold Consolidates in the Short Term, Facing Directional Choice_1

Trading Recommendations

Direction: Short

Entry: 4446.58

Target: 4337.32

Stop Loss: 4521.77

Support Levels: 4352.63 / 4336.62 / 4188.81

Resistance Levels: 4494.19 / 4723.93 / 5068.56

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