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Gold is treading carefully as investors favour equities over safe havens, keeping its momentum in check. This analysis looks at the forces behind gold’s range-bound trade, key technical levels, and the factors that could spark its next decisive move.
Equity markets draw investor attention
Gold eased on Thursday as investors redirected capital towards equities, lifting US stock indices and reducing demand for traditional safe-haven assets.
Fresh US CPI figures showed no change in consumer prices for the month, reinforcing market expectations for a 25-basis-point interest rate cut in September – now fully priced in by traders.
Yet, without a stronger or more sustained dovish tone from the Federal Reserve, gold remains confined to the narrow trading band it has held since April.
According to our research desk, even as US Treasury yields edge lower, the rotation into risk assets has limited bullion’s upside potential.
Earlier-year strength, fuelled by economic uncertainty and elevated inflation fears, has faded as markets turn towards higher-growth opportunities.
Technical analysis
Gold (XAU/USD) remains locked in a sideways range between roughly $3,250 and $3,400, repeatedly testing both support and resistance but showing no decisive breakout.
Picture: XAU/USD trades around 3,346, holding in a tight range after months of sideways movement, shown on the VT Markets app.
Short-term moving averages have flattened, signalling a lack of directional bias, while the MACD remains close to the zero line, underlining market indecision.
In the near term, a sustained close above $3,400 could open the way for a retest of the $3,500 high, while a drop below $3,250 would bring the $3,150 region into focus.
Until either level is breached, gold is likely to continue consolidating, with traders closely tracking US inflation updates and shifts in interest rate expectations for a potential breakout trigger.
Cautious forecast
A decisive break above $3,400 would strengthen the technical case for a move back towards $3,500, particularly if supported by dovish central bank signals or a resurgence in safe-haven demand.
However, without a new macroeconomic driver, gold faces the risk of remaining range-bound or slipping towards the $3,300 mark.
Risk-on sentiment in equities continues to be the primary obstacle to an upside breakout. This is reinforced by investor appetite for higher-yielding opportunities, which reduces the urgency to hold non-yielding assets like gold.
Unless geopolitical tensions flare up or economic data sparks renewed uncertainty, XAU/USD is more likely to drift sideways, with only short-lived rallies emerging on market dips.
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