Gold prices edged higher on Thursday, July 30, after short covering helped the precious metal recover from earlier losses, even as a stronger US dollar and higher US Treasury yields continued to limit upside momentum. Investors remained cautious following the latest US Federal Reserve policy meeting, with attention now shifting to upcoming inflation data that could influence the central bank’s next interest rate decision.
The Federal Reserve kept its benchmark interest rate unchanged at 3.50%–3.75% for a fifth consecutive meeting, in line with market expectations. However, sentiment remained hawkish after three members of the Federal Open Market Committee (FOMC) dissented in favour of a 25-basis-point rate hike, reinforcing expectations that another increase remains possible at the September meeting.
Investors are now awaiting the release of the US Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve’s preferred inflation measure. The data is expected to play a key role in shaping expectations for the Fed’s September policy meeting.
Physical demand remained mixed across Asia. China’s gold imports through Hong Kong declined from the previous month, while buying interest in mainland China remained relatively resilient. In India, weaker jewellery demand led dealers to offer wider discounts as elevated global prices discouraged purchases.
Technical Analysis
From a technical perspective, XAU/USD continues to trade below a well-defined descending trendline, indicating that the broader medium-term trend remains bearish. Although prices have stabilised after rebounding from the US$3,942support area, buyers have so far struggled to establish enough momentum for a confirmed trend reversal.
The price is currently hovering around US$4,047, slightly above the 23.6% Fibonacci retracement level near US$4,046, suggesting that buyers are attempting to defend immediate support. However, gold remains below the 38.2% Fibonacci level at approximately US$4,100 and the 50% retracement around US$4,162, both of which represent significant resistance levels.
The RSI is holding near 45, indicating neutral-to-bearish momentum with no clear signs of overbought or oversold conditions. Meanwhile, the MACD remains below the zero line, although the histogram continues to improve, suggesting that bearish momentum is gradually weakening. A sustained break above the descending trendline and the US$4,100–4,160 resistance zone would strengthen the case for a broader recovery towards the 61.8% Fibonacci level near US$4,234. Conversely, failure to hold above US$4,046 could expose gold to renewed selling pressure, with US$3,942 acting as the next major support.
This is an important development for traders because gold is currently trading at the intersection of major fundamental and technical drivers. While short covering and geopolitical uncertainty continue to provide support, the Federal Reserve’s hawkish tone, stronger Treasury yields, and a resilient US dollar remain significant headwinds.
With the US PCE inflation report approaching, traders should prepare for heightened volatility in XAU/USD, as a stronger-than-expected inflation reading could reinforce expectations for tighter monetary policy, while softer data may increase hopes of a more accommodative Fed and support further gains in gold.
