Article by: ETO Markets
Gold prices have struggled to build on modest Asian‐session gains toward the $3,250 region, trading near the low end of their daily range as a surprise one‐notch downgrade of the US sovereign credit rating to Aa1 by Moody’s—citing an escalating debt burden exacerbated by pending tax‐cut legislation—spurred a selloff in US Treasuries and sent bond yields sharply higher, exerting downward pressure on the non‐yielding yellow metal. Optimism over a 90-day US-China trade truce and hopes for further US trade agreements have similarly capped gold’s upside, even as renewed safe-haven demand stemming from persistent geopolitical tensions—from record Russian drone attacks on Ukraine to ongoing Gaza humanitarian strains—and US Treasury Secretary Scott Bessent’s reiteration of President Trump’s threatened tariffs underpin bullion support. At the same time, recent US inflation data (CPI and PPI) showing easing price pressures, disappointing retail‐sales figures hinting at sluggish growth and a decline in the University of Michigan’s consumer‐sentiment index to its lowest since June 2022 have reinforced market bets on at least two 25-basis-point Federal Reserve rate cuts in 2025, keeping the dollar subdued and lending further buoyancy to gold even as traders await decisive follow-through to confirm whether the recent retracement from the $3,500 all-time high will resume.
From a technical perspective, gold appears to be consolidating beneath the 200-period simple moving average on the 4-hour chart, which has flipped from support into resistance, and a decisive break back above the $…–… supply zone will likely be needed to confirm that a short-term trough is in place. Should bulls manage to push and sustain price above that zone, the next hurdle comes in at $…–…, with the round-number $… level acting as the pivotal barrier: a clear breakout there would invalidate the near-term bearish tilt and open the door to further upside. Conversely, a failure to hold the $… threshold could see support rest at $…–…, and if follow-through selling ensues, the decline may accelerate toward last week’s swing low around $… (the weakest level since April 10), before testing the $… mark; a convincing breach below that level would leave $… as the next key support region.
