Gold is currently recovering against the US Dollar but faces resistance at $3,345 and $3,360. A strong US GDP forecast and expectations of a more aggressive Federal Reserve are keeping the Dollar high. XAU/USD is forming a Bearish Flag pattern, with a target of $3,245. XAU/USD is showing a stronger bearish trend after breaking below an upward channel and forming a bearish flag. Gold is trying to recover due to a weaker Dollar, as some USD long positions are being cut ahead of the US GDP report and Federal Reserve decisions. This recovery is viewed as a correction from oversold conditions.

Gold Price Resistance and Support Levels

Resistance is anticipated at $3,345 and $3,360. Gold needs to move above these levels to change its bearish outlook. Support may lie at $3,295, with further declines potentially reaching $3,245, aligning with the bearish flag’s target. Gold continues to play its historical role as a safe haven and hedge against inflation and currency depreciation. Central banks are major holders of gold, purchasing 1,136 tonnes in 2022. Geopolitical issues and economic fears often affect gold prices, which tend to inversely relate to the US Dollar and risky assets. When the Dollar weakens, gold prices usually rise; when the Dollar strengthens, gold prices can fall. We see gold’s current recovery as a temporary correction within a larger bearish trend. The bearish flag pattern on charts indicates a potential drop towards the $3,245 level. Key events, such as the upcoming US Gross Domestic Product (GDP) data and the Federal Reserve’s interest rate decision, are driving this market sentiment. Expectations for tomorrow’s Q2 GDP data predict a solid 2.5% annual growth rate, which supports the Dollar’s strength. Additionally, fed funds futures show over an 80% chance of another rate hike at next week’s meeting. This hawkish view stems from the recent June Consumer Price Index (CPI) report, indicating that inflation remains high at 3.8%.

Investment and Hedging Strategies

In this environment, buying put options could be a smart strategy to hedge or bet on a downward trend. We are closely monitoring the $3,345 and $3,360 resistance levels. Failing to break above these levels would confirm a bearish stance. These prices could be good choices for put options or for starting bear call spreads to earn premium. Looking back at the aggressive tightening cycle between 2022 and 2023 serves as a reminder. During this time, constant Fed rate hikes presented strong challenges for gold, even with high inflation. This historical context supports the idea that a strong central bank can keep gold prices lower for a long time. While the immediate outlook is bearish, we recognize strong support from central banks. Recent World Gold Council data for the second quarter of 2025 indicates that sovereign purchases have slowed from record levels seen previously but remain steady, adding over 220 tonnes worldwide. This long-term demand may create a price floor and might slow any drop towards the $3,245 target. Create your live VT Markets account and start trading now.

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