Gold prices fell to about $3,360 on Wednesday after rising for three days. This drop comes as many expect the Federal Reserve may restart its monetary expansion in September, which usually helps gold since it doesn’t yield interest. Investor sentiment for a more relaxed Fed policy grew after the US Nonfarm Payrolls report indicated a slowdown in job demand. Additionally, President Trump is likely to announce a new Fed Governor to replace Adriana Kugler, which could lead to changes in leadership and future rate cuts.

Gold Price Movement

Gold is currently moving within a Symmetrical Triangle pattern, fluctuating around the 20-day Exponential Moving Average. The 14-day Relative Strength Index shows less volatility, highlighting important support and resistance levels for potential price shifts. Central banks are the biggest buyers of gold, significantly increasing their reserves. In 2022, they added 1,136 tonnes, worth about $70 billion, showcasing gold’s status as a trusted store of value. Emerging markets like China, India, and Turkey are boosting their gold reserves. Gold prices generally move in the opposite direction of the US Dollar and US Treasuries. These prices react to geopolitical tensions, recession worries, and interest rates, as these elements affect gold’s desirability as a safe haven and a hedge against inflation. As gold dips near $3,360, a potential opportunity arises ahead of the Fed’s meeting in September. The market anticipates a return to easier monetary conditions, bolstered by the July jobs report, which showed only 95,000 new jobs. This slowdown in hiring increases the likelihood of a dovish Fed shift. Currently, gold’s price is consolidated in a Symmetrical Triangle pattern, suggesting a significant move may be coming. The low reading on the 14-day Relative Strength Index indicates reduced volatility, hinting at momentum building for a breakout. We are monitoring the triangle’s edges for our next indication.

Trading Strategy Insights

For traders in derivatives, this situation points to preparing for a price spike instead of choosing a specific direction just yet. Purchasing long-dated straddles or strangles for September allows us to benefit from a significant price change, whether the Fed meets expectations with a rate cut or surprises the market. This approach effectively positions us for the breakout before it occurs. We are also tracking the reverse relationship with the US Dollar, which recently fell below 102 on the DXY index. The dollar’s weakness, along with declining Treasury yields, makes holding a non-yielding asset like gold more appealing. This trend is likely to continue if the Fed hints at an easing cycle. The long-term outlook remains very positive due to strong buying from central banks. The record purchases in 2022 are notable, and the World Gold Council’s latest report for Q2 2025 indicated another 215 tonnes added to official reserves. This persistent demand from major players like China and Turkey provides a solid foundation for gold prices. Lastly, gold’s role as a safe haven is crucial, especially with rising trade tensions adding global uncertainty. The latest core inflation data for July, which declined to 2.8%, suggests that price pressures are not entirely under control. These factors reinforce the importance of holding gold as a defense against inflation and geopolitical risks. Create your live VT Markets account and start trading now.

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