Gold prices dropped over 0.26% during the North American session, adding to an earlier decline. This drop happened after the U.S. released strong economic data, which fueled expectations that the Federal Reserve (Fed) will keep interest rates steady in the next meeting. Positive market feelings, driven by good job and consumer data, added downward pressure on gold. Initial Jobless Claims decreased from 228,000 to 221,000, and Retail Sales data showed a 0.6% monthly increase in June, partly due to higher prices.

Federal Reserve Commentary

Officials from the Federal Reserve spoke about inflation and their steady monetary policy. Governor Adriana Kugler pointed out that inflation remains a concern, while San Francisco Fed President Mary Daly talked about the economy’s state in light of ongoing tariffs. Market expectations show that traders believe the Fed will not lower rates soon, which affects gold demand. The December 2025 fed funds futures contract suggests an easing of only 42 basis points. Other factors, such as stable U.S. Treasury yields and a rising U.S. Dollar Index, also impacted gold prices. It’s highly likely the Federal Reserve will keep rates unchanged at their next meeting. The XAU/USD technical outlook shows gold trading between $3,300 and $3,400, with possible movements towards $3,452 or $3,246 based on market conditions.

Technical Outlook and Strategy

Given the strong economic data, we think gold prices are likely to go down in the short term. The encouraging job and retail sales figures leave little room for the Federal Reserve to cut rates, supporting bearish or neutral strategies on gold for the coming weeks. Latest inflation data backs this view. The June Consumer Price Index showed inflation at 3.1%, still above the central bank’s target. The CME FedWatch Tool indicates over a 90% chance that rates will stay the same during the next meeting. Officials like Kugler’s comments about ongoing inflation suggest a cautious stance will last. Historically, gold struggles when monetary policy is tight and the U.S. Dollar is strong, as seen during the rate hikes in 2022. The market expects only 42 basis points of easing by the end of next year, indicating a similar situation now. This historical context supports continued pressure on gold. Considering the current outlook, with gold trading between about $2,300 and $2,400, traders may want to consider strategies that benefit from this stability or a slight decline. Selling call options or setting up bear call spreads above near-term resistance could be wise ways to take advantage of limited upside potential. This strategy allows traders to profit from time decay unless a significant bullish event occurs. Create your live VT Markets account and start trading now.

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