Gold prices continue to drop due to strong US economic data, which has led to increased expectations for higher interest rates. The recent FOMC meeting was less supportive than predicted, resulting in a negative outlook for gold. The expectation of higher interest rates is not good for the market. Gold’s ability to rise is limited since there are no positive catalysts, and interest rate expectations are weighing it down. The upcoming US Non-Farm Payroll (NFP) report may impact gold prices; weak data could support gold, while strong figures may push prices lower. However, in the long run, gold is expected to trend upwards as real yields are forecasted to fall with Federal Reserve easing.

Technical Analysis

On the daily chart, gold prices are approaching a support level of 3,245. Buyers may come in at this level, keeping risks defined below, with hopes of a recovery back to resistance. On the other hand, sellers are looking to break below this support to push prices down towards 3,120. The 4-hour chart shows a downward trendline that is guiding the bearish trend. Sellers are likely to depend on this trendline to lower prices, while buyers will aim to break above it, targeting the 3,333 swing point and possibly rallying to 3,438 resistance. In the 1-hour chart, the trendline remains the focus, with sellers expecting rejection and buyers hoping for a breakout. Upcoming US economic reports could further sway gold’s movement.

Market Expectations

As of today, July 31, 2025, gold has further declined due to strong US economic data, which delays expectations for interest rate cuts. For instance, today’s Personal Consumption Expenditures (PCE) price index showed core inflation steady at 2.9% year-over-year, making a quick decline unlikely. This strengthens the Federal Reserve’s hawkish stance, making it tough for gold to rise in the short term. All attention is now on tomorrow’s Non-Farm Payroll (NFP) report for August 1, 2025, which will be crucial. With initial jobless claims low, averaging around 230,000 recently, a robust jobs report could push gold below significant support. Traders might look into buying puts or selling short-dated call options to hedge against a potential drop toward the $3,120 level. For those anticipating a decline, the downward trendline on the 4-hour chart is a crucial indicator. Selling futures with a stop-loss above this trendline could be a smart strategy in the coming days. A decisive break below the $3,245 support level would likely increase selling pressure. Conversely, the $3,245 level is a key support area where buyers could step in. A trader expecting a reversal might buy call options with a near-term expiration, using a break of this support as a clear exit signal. A bounce from this level would first aim for the swing point at $3,333. Despite short-term pressures, we recall the trend from late 2023 and 2024 when hawkish policies from the Fed eventually led to easing. The overall expectation remains for falling real yields, which should support gold in the end. Therefore, using these price dips to buy longer-dated call options, such as those expiring in early 2026, could be a wise move for positioning in the future uptrend. Create your live VT Markets account and start trading now.

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