After reviewing the movements of the futures since the beginning of last week, I anticipate that the surging optimism on the trade tariff front has resulted in bearish technical formations, which could keep the gold futures experiencing a steep slide.
On Sunday, the US-EU agreement on imposition of a 15% tariff on most European goods entering the US, half of the previously threatened rates, helped avert a full-scale trade conflict between the United States and the European Union.
Meanwhile, top US and Chinese officials were set to meet in Stockholm on Monday to discuss extending their tariff truce by three months, as neither side has a plan to impose new duties ahead of the August 1 deadline, which could prolong some market volatility this week.
I anticipate that it could be difficult to convince China, as its inclination to continue with the “petroyuan” against the petrodollar system, which it launched in 2018 to “de-dollarize” its economy, may be a challenge.
I find that the trade tariff deadline on August 1, 2025 seems inevitable to convince the major trading partners as China had already launched “petroyuan” against the petrodollar system in 2018 while Russia has also been working to cut its dependence on the U.S. dollar, with President Vladimir Putin stating in 2019 that the country was aiming to “de-dollarize” its economy.
Secondly, China has allowed Saudi Arabia to trade in its commodity exchange through its balance reserve of “petroyuan,” which it gets after selling oil to China, and this is the main reason for the growing optimism on the trade tariff front, which weighed on gold demand even as the dollar remained subdued.
Undoubtedly, progress toward a trade truce lowered uncertainty, drawing funds into equities and reducing bullion’s attraction.
Now, attention turns to the Federal Reserve’s two-day meeting this Wednesday, while the Central bank is expected to hold the rates unchanged.
I find that this scenario looks evident enough to extend the skepticism over the success of a trade deal between the U.S. and China, as the Chinese intention is to carry on with its “petroyuan,” while U.S. President Donald Trump’s main agenda is to keep the USD stronger through imposing tariffs on its trading partners.
Undoubtedly, the US has completed its tariff trade deals with Japan and Europe, but a tariff deal with China could bring new conditions where the U.S. has to deal with some modifications in its trade policies to accommodate tariffs on Chinese goods.
I anticipate that any deviation from the tariff trade deal with China could generate fresh demands from other trading partners of the U.S. to redefine their deals with them, which could extend volatility in gold futures.
In contrast, if this deal between the U.S. and China remains successful, gold futures will see a steep slide this week.
Technical Level to Watch
In a weekly chart, gold futures are trying to hold the immediate support at the 9 DMA at $3383 but the formation of a bearish hammer last week will continue to extend bearish pressure to push them to test the next significant supports at the 3299 where a breakdown below this could push the gold futures to test the significant support at the 50 DMA at $2952 this week.
In contrast, any upward move by the gold futures will attract gold bears to upload fresh shorts above the immediate resistance at $3455 with a stop loss at $3485.
In a daily chart, gold futures are trading below the 9 DMA despite a bullish opening, but now trying to hold the immediate support at $3388 and about to form an exhaustive hammer since the formation of three black crows, indicating a strong bearish reversal.
In a 1-Hr. Chart, gold futures are trying to hold at the immediate support at the 100 DMA at $3292, which is likely to be pierced shortly, and this breakdown will push the futures to test the next support at the 200 DMA at $3376, where a breakdown will result in a steep slide of gold futures in today’s session.
Disclaimer: Readers are advised to take any position in gold at their own risk, as this analysis is based only on observations.