Gold price (XAU/USD) edges higher to near $4,415 during the early Asian session on Tuesday. The precious metal extends its upside amid fading expectations for further US Federal Reserve (Fed) rate hikes. Traders will closely monitor the developments surrounding the Middle East conflicts.
An unexpected decline in US Nonfarm Payrolls (NFP) in July, together with data released last week showing only modest consumer price inflation, has curbed expectations of a US interest rate increase next month. This, in turn, exerts some selling pressure on the US Dollar (USD) and makes bullion cheaper for most buyers.
Markets are now pricing a 35% chance of a Fed rate hike at the upcoming policy meeting, down from 47% a month earlier, according to the CME FedWatch Tool.
On the other hand, ongoing tensions in the Middle East could reignite oil-driven inflation concerns and weigh on the yellow metal. US President Donald Trump said on Monday that he’s not interested in extending the expiring agreement with Iran and fighting flaring anew in Lebanon, per Bloomberg.
“If oil doesn’t steal the show again, if the situation in the Middle East does not erupt and oil prices spike, then it looks as if the path of least resistance for gold is higher,” said James Steel, chief precious metals analyst at HSBC.
China Retail Sales miss forecasts as July momentum stalls again
ING’s Lynn Song points out that China’s consumer backdrop softened again in July, with headline retail activity losing what little traction it had regained. According to ING, “retail sales failed to build on the small recovery of last month, falling to 0.6% YoY in July, down from 1.0% YoY in June.” The bank stresses that this outcome “fell well short of market expectations (market: 1.5%, ING: 1.7%),” underlining how fragile underlying demand remains. On a cumulative basis, ING notes that “year-to-date, retail sales have grown by just 1.2% YoY,” reinforcing the picture of subdued consumption despite earlier policy efforts to support spending.
Technical Analysis: Gold maintains a constructive outlook in the near term
In the daily chart, XAU/USD retains a bullish near-term bias as spot holds above both the 100-day simple moving average (SMA) and the Bollinger middle band, keeping price comfortably supported within the broader uptrend structure. The Relative Strength Index (14) at 65.37 leans toward overbought territory, suggesting upside momentum remains firm but vulnerable to consolidation after the latest advance.
On the topside, immediate resistance aligns with the upper Bollinger band near $4,485; a sustained break above this zone would open the door to further gains and extend the current bullish phase. On the downside, initial support is seen just under the market at the 100-day SMA around $4,385, ahead of the Bollinger middle band at $4,195, while a deeper pullback toward the lower band near $3,900 would be needed to seriously challenge the prevailing positive outlook.
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