The gold market kicked off the week of July 21, 2025, on a strong note, with spot gold prices briefly breaking through the key resistance level of $3,400 per ounce—a fresh high since mid-June—before settling at $3,394.98, marking a 1.34% daily gain. This rally was driven by a combination of technical breakout signals and macroeconomic policy uncertainties.
Technical “Ascending Triangle” Suggests Potential Breakout
David Scutt, Market Analyst at City Index, noted that gold has successfully rebounded six times from the uptrend support line established since the February 28 low. Currently, this support converges with the $3,360 resistance level, forming a narrowing “ascending triangle” pattern. Despite intense tug-of-war between bulls and bears, the Relative Strength Index (RSI) and MACD indicators show mildly bullish signals. A confirmed breakout above $3,377 (the July 16 high) could pave the way toward $3,400 and even the all-time high of $3,500.
Trade Tensions Fuel Safe-Haven Demand
With the August 1 deadline for U.S.-EU trade talks approaching, the EU is reportedly preparing countermeasures amid fading hopes for a deal. Market anxiety over renewed trade conflicts pushed the U.S. dollar index down 0.7%, while the 10-year Treasury yield hit a one-week low—both factors reducing the opportunity cost of holding gold. David Meger, Director of Metals Trading at High Ridge Futures, stated, “The looming deadline injects uncertainty, which inherently supports gold.”
Fed Rate Cut Expectations Persist
According to the CME FedWatch Tool, markets are pricing in a 63% probability of a September rate cut. Comments from Fed Governor Christopher Waller on July 19, advocating for a cut “as early as this month,” further boosted gold prices by nearly 1%. Persistent dovish expectations continue to weigh on real yields, enhancing gold’s appeal as a non-interest-bearing asset.
Strong Technical Resistance at $3,400
Despite Monday’s brief breach of $3,400, bears quickly pushed prices back below this psychological barrier, underscoring its significance. Scutt warned that failure to hold above the $3,360-$3,377 zone could trigger a pullback toward the dual support of the 50-day moving average and the uptrend line (around $3,310-$3,283), with a deeper test of $3,250 possible.
Volatility in the Dollar and Treasury Yields
While the dollar weakened temporarily, any progress in trade talks or stronger-than-expected U.S. economic data could revive the greenback. Moreover, with the 10-year yield still above its 2025 low of 2.5%, a “hawkish cut” signal from the Fed might lift real rates, dampening gold’s investment demand.
City Index maintains a cautiously bullish stance, noting the technical setup “marginally favors an upside breakout” but warning of false breakout risks. Independent analysts highlight that the battle at $3,400 will dictate near-term direction:
Upside Scenario: A clear break above $3,451.3 (June 16 high) could reignite momentum toward the record $3,500 level.
Downside Risk: A drop below $3,250 support may trigger technical selling, with a potential 5%-7% correction.
Conclusion: Navigating a Policy-Sensitive Week
Gold faces a trifecta of tests this week: trade policy developments, Fed rhetoric, and technical resistance. Traders are advised to monitor the U.S. Q2 GDP release and the August 1 trade deadline closely. In an environment rife with uncertainty, gold’s role as a traditional haven asset remains structurally supported, but volatility demands nimble positioning.
