Fundamental Overview

Gold initially strengthened following the latest FOMC decision, which saw three dissenters vote in favor of a rate hike. While Fed's Logan and Fed's Hammack were widely expected to support an increase, the addition of Fed's Kashkari — a known hawkish member — came as a surprise. Three dissents at a single FOMC meeting are relatively uncommon and signal notable internal division within the rate-setting committee. Combined with the roughly 30% probability of a rate hike that markets had already priced in prior to the release, this led to some hedge unwinding, even though the broader macroeconomic picture remained unchanged. The post-decision gains were eventually fully erased.

Fed Chair Warsh declined to offer any clear signals about the next policy meeting, continuing his approach of limited forward guidance. As a result, the next major market event will be the US CPI report scheduled for August 12, with the data likely to determine whether the Federal Reserve opts for a rate hike in September. CPI is one of the most closely watched inflation gauges by both the Fed and markets, as it directly tracks changes in consumer prices across a broad basket of goods and services.

On the geopolitical front, the situation in the Middle East has seen little change, although Trump's rhetoric appears to have softened modestly. Until a clear de-escalation materializes, inflation risks remain skewed to the upside. Gold has historically attracted demand during periods of geopolitical uncertainty, as investors seek assets perceived as stores of value outside the fiat system.

Gold also received a boost from heavy selling in the US dollar after Japan and South Korea intervened in the foreign exchange market. Gold is priced in dollars on global markets, so a weaker dollar typically makes the metal more affordable for buyers holding other currencies, creating an inverse relationship that amplifies gold's sensitivity to currency moves. The movements in the USD/JPY pair were significant, and those flows spilled over into other markets. Coupled with month-end trading activity, this produced a highly volatile and noisy trading session.

Fundamentally, the market remains in the same position it occupied before the FOMC meeting. The focus now shifts to the upcoming US CPI data and further developments in US-Iran relations.

Gold Technical Analysis — Daily Timeframe

On the daily chart, gold is breaking above a downward trendline. Buyers are expected to enter around current levels with defined risk below the broken trendline, positioning for a rally toward the next trendline near the 4,400 level. Sellers, conversely, will look for the price to fall back below the trendline to target a decline toward the 3,885 level.

Gold Technical Analysis — 4-Hour Timeframe

On the 4-hour chart, price action has been largely rangebound since late June, leaving traders to wait for either a technical breakout or a fundamental catalyst. Buyers will need a decisive break above the 4,200 resistance to gain conviction for a trend reversal. Sellers are likely to step in near that resistance with defined risk above it, targeting a move down to the 3,885 level.

Gold Technical Analysis — 1-Hour Timeframe

On the 1-hour chart, a minor resistance zone sits around the 4,120 level, an area where the price has been rejected multiple times in recent weeks. Sellers will likely engage near this resistance with defined risk above it, continuing to target new lows. Buyers, meanwhile, will look for a breakout to increase bullish positions toward the 4,200 resistance.

Upcoming Catalysts

The week concludes with the release of the US Q2 Employment Cost Index. The ECI is a quarterly measure from the Bureau of Labor Statistics that tracks changes in the cost of labor, including wages and benefits, and is considered one of the Fed's preferred indicators for assessing wage-driven inflation pressure. Traders will also continue monitoring developments between the United States and Iran.