Gold’s Bullish Momentum Is Nearing Its Limit, Beware of a Pullback at Elevated Levels

Summary:

Despite another rise in oil prices, spot gold continues to demonstrate remarkable resilience, making it a key asset in this week’s safe-haven and inflation-hedging trades. Cooling US nonfarm payrolls have reduced expectations for further Federal Reserve tightening, while the stalemate in US-Iran negotiations and renewed geopolitical tensions have jointly pressured the US dollar and continued to support gold prices. However, with the release of the US July CPI report approaching, profit-taking pressure is building after gold’s consecutive gains, significantly increasing the risk of a pullback from elevated levels.

SELL XAUUSD

EXP

TRADING

4390.37

Entry Price

4050.00

4580.00

4403.34 +34.65 +0.79%

0.0

Pips

Flat

4050.00

Exit Price

4390.37

Entry Price

4580.00

Fundamentals

On Tuesday, gold prices remained firmly above the $4,400 level, marking a third consecutive session of gains.

Following an unexpected decline of 23,000 in US nonfarm payrolls in July, market expectations for another Federal Reserve rate hike at the September policy meeting eased significantly. Although a full restoration of normal shipping through the Strait of Hormuz remains unlikely in the near term and inflationary pressures have not completely faded, the CME FedWatch Tool shows that market expectations for a September rate hike have fallen back to roughly a 50-50 split.

The decline in rate-hike expectations has directly pressured the US dollar while simultaneously reducing the opportunity cost of holding gold, providing relatively solid support for bullion prices.

Meanwhile, negotiations between the United States and Iran over a potential peace agreement and the restoration of shipping through the Strait of Hormuz have reached an impasse. US President Donald Trump previously publicly demanded war reparations from Iran on Truth Social, responding to claims for compensation made by Iranian negotiators. The conflict, which has lasted for several months, has caused significant casualties and inflicted extensive damage on regional infrastructure.

The renewed escalation in geopolitical risks has not only boosted safe-haven demand across Asian markets but has also pushed crude oil prices and US Treasury yields higher. With gold being influenced simultaneously by safe-haven demand, a weaker US dollar, and changes in real interest rates, the balance between bulls and bears is entering a new phase of competition.

At present, gold is supported by a weaker US dollar and elevated safe-haven demand, but at the same time faces headwinds from rising Treasury yields and potential inflationary pressures. Against this backdrop, whether gold can maintain its current one-way bullish structure remains highly uncertain.

More importantly, the US July CPI report is due on Wednesday. Ahead of this key inflation release, some short-term bullish positions may opt to lock in profits at elevated levels to reduce exposure to post-data volatility. Once significant position adjustments begin, profit-taking pressure on gold could intensify rapidly, potentially triggering a short-term rotation from high-level consolidation toward a correction.

Gold’s Bullish Momentum Is Nearing Its Limit, Beware of a Pullback at Elevated Levels_1

Technical Analysis

From a technical perspective, gold extended its gains on Tuesday and once again set a new short-term high, further reinforcing its bullish structure. The sustained upward move indicates that buyers remain firmly in control of the short-term market, while trend indicators have yet to provide a clear reversal signal.

However, as prices continue to establish new highs, the magnitude of the short-term advance has expanded significantly, and bullish positioning is becoming increasingly crowded. As gold approaches key resistance levels, the ability of marginal buyers to continue supporting the rally will be critical in determining whether the uptrend can be sustained.

We believe the current short-term rebound in gold is gradually approaching its limit. If prices move further toward the $4,465–$4,480 region, this area could become a key zone for concentrated profit-taking by bulls and renewed short positioning.

Therefore, the market should closely monitor how gold behaves around this key resistance zone. If gold encounters significant selling pressure within the $4,465–$4,480 region, accompanied by rising trading volume, a reversal in momentum indicators, or a renewed break below short-term support, it could signal that the current rally is nearing its end and that the market may enter a relatively sharp technical correction.

Only a decisive breakout above $4,480, followed by sustained trading above this level, would significantly weaken the current bearish correction thesis.

Trading Recommendation

Direction: Sell

Entry: 4,465

Target: 4,050

Stop Loss: 4,580

Strategy Valid Until: September 10, 2026, 23:55

Support: 4,356, 4,339, 4,312

Resistance: 4,435, 4,476, 4,481

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