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Following Friday’s big recovery, gold prices eased back a tiny bit but remained supported amid talks of the US dollar and yields forming a near-term top, not helped by the sacking of the BLS chief, with President Trump accusing the agency of political interference in the data. Meanwhile, Fed Governor Adriana Kugler’s early resignation – she was due to remain until January – creates an opening that could influence the Fed’s trajectory beyond just September. However, risk appetite improved a little with European equities and futures trading on a firmer footing in the first half of Monday’s session, clawing back some composure after Friday’s disappointing US jobs report triggered the drop. With the Swiss franc and Japanese yen both lagging a little, it is possible that the price of gold may not be able to sharply extend Friday’s rally. Still, gold bears are now in need of a fresh signal to exert pressure again like we saw last week.
 

Not much macro data this week

Much of the focus for the US dollar index now remains on the dovish implications of Fed Governor Kugler’s resignation and the rather abrupt dismissal of the BLS chief. On the data front, US factory orders are due later today, with ISM services on Tuesday and the Bank of England rate decision looming on Thursday. In Europe, the Sentix Investor Confidence index surprised to the downside, falling to -3.7 against expectations of +6.2 – a stark miss and a reminder that optimism across the euro area remains patchy. Overall, the macro calendar is quite quiet this week, which should put the focus on Fed speak and trade talks.
 

Gold’s resilience is impressive, but new triggers lacking

Gold’s resilience in the face of a stable equity market following the EU-US trade agreement suggests some investors still feel that the broad-based tariffs deal would be more of a burden than a boon for the global economy, especially after some nations like Switzerland were slapped with higher rates. While a major trade war has been averted for now, it is difficult to say to what extent this has reduced safe-haven demand for gold. But gold’s extraordinary rally and the parabolic-like moves in recent quarters would always come to an eventual pause, which has been the case in the last few months. 

So, the metal is in need of a new major catalyst to drive it to new highs beyond the record $3,500 hit in April. I am not sure if Friday’s soft US jobs report is the answer, even if it has led to a big move in gold on Friday.

As we transition to the middle of the third quarter and head deeper into the second half of 2025, gold’s long-term uptrend may be tested, or at least the pace of future gains is likely to slow down. With prices deeply overbought on the long-term charts, continued consolidation now appears both healthy and necessary. Even a correction should not come as surprise given the big return of risk appetite with the benchmark US and European indices recently hitting new record highs.
 

Gold short-term technical analysis: Daily Chart

Following Friday’s big recovery, gold has broken a few resistance levels and climbed back above the 21-day exponential moving average. This has effectively eroded the short-term bearish control, following last week’s break down below the $3,300 level. Thus, for the bears to regain control again, they will need to push gold prices back below this level in the coming days. Interim support now comes in at $3,335.

From a bullish point of view, gold already reached its first upside target at $3360. The next upside target and potential resistance is seen around $3,385, followed by $3,400, where a bearish trend line also comes into play there.
 

Longer-term gold analysis

Zooming out of the recent chop zone, the monthly chart is still looking quite strong, but in recent months we have seen some indecisive price action at lofty levels. After forming two doji candles in the previous couple of months, there was a hattrick of such candles following the conclusion of the month of July. A doji candle is one with a small body and long wicks on one or both sides. This shows that neither the bulls nor the bears are in full control. It makes sense given that BIG rally over the past several quarters to repeated all-time highs.

Now with gold’s long-term chart still looking quite strong, the long-term oscillators are still flashing warning signs. For example, the monthly RSI has remained above the ‘overbought’ threshold of 70 since April 2024, and it has accelerated to even more extreme levels this summer of above 85.00. Such RSI levels have invariably led to periods of consolidation or a pullback in the past. This begs the question: are we about to witness another such an outcome?

The RSI on its own won’t matter to much, as long as the underlying price action continues to remain bullish, as it so far has. Over the past three months, gold has simply been consolidating. Yet, for the RSI to go to more neutral levels, we need to see a much longer period of consolidation, or a sharp sell-off.

The bulls would like to see continued consolidation at these levels which, through time, should allow the RSI to unwind from overbought levels. The bears, as well the bulls who missed out on the big rally, will want the RSI to unwind through price action via a sizeable correction.

Ultimately, the long-term chart of gold still looks quite bullish, and we haven’t had any major reversal signs to point to. The doji candles by themselves and the extreme RSI levels are merely a warning sign of exhaustion. A proper breakdown below $3,300 level is a prerequisite now for the bears.

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