Gold prices are trading near $4,018 per ounce during early Asian hours on Wednesday, July 29, after hitting a one-week low on Tuesday. The decline was driven by a strong U.S. dollar, which remains near a one-month high, as investors maintain caution ahead of the Federal Reserve's interest rate decision and a speech from Fed official Waller.
Market expectations point to a hawkish stance from the Federal Reserve, with a 71% probability of rates being held steady on Wednesday. However, the chance of a September rate hike has surged to 75%, pushing up rate hike expectations and the dollar's value. This puts pressure on zero-yield gold. Since the onset of the U.S.-Iran conflict in late February, gold prices have fallen roughly 24% due to inflation and interest rate concerns. Additionally, the U.S. June PCE data, scheduled for release on Thursday, will provide further clues on monetary policy direction.
Gold Technical Analysis: As expected, gold in the U.S. session on Tuesday initially rebounded, but after surging late in the night, prices fell again amid escalating U.S.-Iran tensions. This aligns with our earlier observation that recent market trends lack clear continuity, regardless of whether the direction is bullish or bearish, and trades should be short-term focused. The overall movement has fully matched our predictions: after the price gap was filled and the key support level at $4,050 was effectively breached, the market shifted from a range-bound pattern to a bearish dominant phase. During the European session, the rebound tested resistance at $4,054 before declining again.
The $4,000 level is now a fiercely contested battleground for both bulls and bears. To the upside, $4,100 serves as a major resistance point, while to the downside, $4,950 is a critical defense line for the previous low. Until the Federal Reserve's policy path becomes clearer, gold is likely to maintain a "ceiling above, floor below" range-bound pattern.
On the 4-hour chart, gold remains in a broad range, currently testing the $4,010 level again. The short-term trend may continue to probe lower, with the next support focus around $4,000. However, daytime trading could see limited volatility. Upside resistance is initially seen at $4,080-$4,100. The key event will be tonight's Federal Reserve interest rate decision and Waller's speech. A bullish turnaround for gold is only possible if Waller adopts a dovish tone. In the meantime, gold may continue to grind a bottom.
Overall Trading Strategy: For the short term today, the recommended approach is to prioritize selling on bounces, supplemented by buying on dips. Key upside resistance is in the $4,060-$4,090 range, while downside support lies between $4,000 and $3,970.