Gold (XAU/USD) has been consolidating within a well-defined range for the past week, as seen in the price action on the 1-hour chart. The market has been oscillating between a strong support zone around $2,900 and resistance near $2,928, forming a tight range with multiple rejections at both levels. This suggests that liquidity is accumulating, and a breakout could be imminent.
Given the current structure, the next significant move will likely be driven by fundamental catalysts and market sentiment shifts. Below, we break down the technical and macroeconomic factors that could influence gold’s next move.
⸻
1. Technical Outlook: Gold Stuck in a Ranging Market
Key Technical Observations:
•Range-Bound Price Action:
Gold has been consolidating between $2,900 (support) and $2,928 (resistance), with multiple failed attempts to break above or below this range. Such prolonged consolidation often precedes a breakout as liquidity builds up on both ends.
•Liquidity & Fake Breakouts:
A breakout from this range will likely involve liquidity grabs, where price moves in one direction to clear stop losses before reversing sharply. Traders should be cautious of fake breakouts, especially during the Asia and London sessions, as gold typically makes its significant moves in the US session when volume and institutional activity increase.
•Fair Value Gap (FVG):
A small Fair Value Gap (FVG) is visible near $2,920-$2,923, which could act as a short-term magnet for price before a potential reversal.
Breakout Scenarios:
1.Bullish Breakout:
•If gold breaks above $2,928 with strong momentum, the next upside target would be $2,940-$2,950.
•A strong close above this level could open the doors for $3,000 in the coming sessions, especially if macroeconomic conditions favor safe-haven assets.
2.Bearish Breakdown:
•A breakdown below $2,900 could trigger further downside toward $2,885-$2,875, where stronger demand may appear.
•A deeper correction could send prices toward the $2,860-$2,850 zone before a potential reversal.
⸻
2. Fundamental Drivers: What Could Move Gold This Week?
Gold’s next move will likely be influenced by macroeconomic developments, with several key factors in play.
A. Trump’s Comments on Tariffs & Market Sentiment
Former U.S. President Donald Trump recently made comments regarding potential tariffs, which could significantly impact global markets.
•If new tariffs are announced, it could lead to market uncertainty and risk aversion, increasing demand for safe-haven assets like gold.
•On the other hand, if tariffs are perceived as inflationary, the Fed may maintain higher interest rates for longer, which could weigh on gold prices.
B. Bitcoin’s Weekend Selloff & ETF Market Reaction
Over the weekend, Bitcoin (BTC) experienced a selloff following an underwhelming Bitcoin summit, where major industry players failed to deliver market-moving announcements.
•Why does this matter for gold?
•BTC and gold often compete as alternative stores of value. A sharp drop in Bitcoin could lead some investors to rotate capital into gold.
•Bitcoin ETFs haven’t reacted yet (since markets were closed). Their opening moves could influence risk sentiment and indirectly impact gold’s demand.
C. Federal Reserve & Interest Rate Expectations
•The next Federal Reserve meeting and key economic data (such as inflation reports) will play a crucial role in shaping gold’s trajectory.
•If inflation remains sticky and the Fed signals higher-for-longer interest rates, gold may face downward pressure.
•However, any signs of dovish policy shifts could trigger a rally in gold prices.
⸻
3. Trading Strategy: How to Approach Gold This Week?
A. Key Levels to Watch:
•Resistance: $2,928 (breakout level), $2,940, $2,950
•Support: $2,900 (breakdown level), $2,885, $2,875
B. Ideal Trade Setups:
1.Breakout & Retest Strategy:
•Wait for a clean breakout above $2,928 with volume confirmation.
•Look for a retest of $2,920-$2,925 as new support before entering long positions.
2.Liquidity Grab Reversal:
•If price spikes above resistance ($2,928-$2,930) but fails to hold, a short position targeting $2,900 could be a good opportunity.
•Similarly, a false breakdown below $2,900 could present a buying opportunity back into the range.
3.Session-Based Moves:
•Watch for fake breakouts during Asia & London sessions and the real move in the US session, when institutional players step in.
⸻
4. Conclusion: Awaiting a High-Impact Breakout
Gold is currently in consolidation mode, but a breakout is expected soon as liquidity builds up. Traders should watch for key breakout levels and fundamental triggers such as Trump’s tariff comments, Bitcoin’s ETF reaction, and upcoming Fed data.
•A bullish breakout could take gold to $2,940-$2,950, while a breakdown could lead to $2,875-$2,860.
•Be cautious of fake breakouts and liquidity grabs, especially during the Asia and London sessions.
•The real move is likely to occur in the US session, with macroeconomic events acting as the catalyst.
Stay updated, manage risk wisely, and prepare for volatility as the market prepares for its next decisive move!
