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Gold Market Analysis: Weekly Review and Trading Outlook July 2025

 

Gold Market Analysis: Weekly Review and Trading Outlook

US Economic Data Review

Last week (July 14-18, 2025) brought a series of significant US economic releases that substantially impacted market sentiment and gold pricing, with gold closing down 0.16% for the week. Here's a breakdown of the key data points:



June Seasonally Adjusted CPI Data

The June Consumer Price Index rose 0.3% month-over-month, meeting market expectations. However, core CPI (excluding food and energy) increased just 0.2% monthly, falling short of the anticipated 0.3%. Annual CPI climbed from 3.1% to 3.3%, signaling mounting inflation pressure, though the slower core inflation suggests near-term price pressures may be easing. Import-related goods, particularly household items, saw notable price increases due to tariff impacts, further elevating inflation expectations.

👉US CPI Data Surprises & Dollar Strength Analysis

June PPI Monthly Rate

The June Producer Price Index remained flat month-over-month, missing the expected 0.2% increase. This data reveals limited production-side price pressure, strengthening market expectations that the Federal Reserve might cut rates later in 2025. Nevertheless, tariff policy uncertainty keeps markets cautious about future inflation trends.

June Retail Sales Monthly Rate

June retail sales surged 0.6% month-over-month, crushing the expected 0.2% and rebounding sharply from May's -0.9%. The control group retail sales (a key GDP calculation component) rose 0.5%, demonstrating robust US consumer spending. This data reduced the probability of near-term Fed rate cuts while supporting dollar strength, creating headwinds for gold prices.

👉Economic Data Analysis: Fed Beige Book, Retail Sales & Market Outlook

Federal Reserve Economic Beige Book

The Fed's economic report showed the US economy maintained resilience through the first half of 2025, though tariff policies and geopolitical risks could threaten future growth. The report noted that tariff-driven import cost increases are gradually filtering through to consumer prices, particularly in textiles, metals, and food sectors. The Fed's cautious inflation stance suggests monetary policy may remain steady, with no significant easing in the near term.

👉Powell Dismissal Storm: Fed Independence Crisis Drives Gold Rally

Powell Dismissal Rumors

Market rumors surfaced last week that President Trump might remove Fed Chair Powell before his term expires in May 2026, triggering severe market volatility. On July 16, Bloomberg reported Trump discussed with Republican lawmakers whether Powell should be replaced early, causing the S&P 500 to plummet temporarily. However, Trump subsequently denied these rumors, calling Powell's removal "extremely unlikely", which quickly stabilized market sentiment, boosted the dollar, and saw gold drop 0.26% during Asian trading before recovering in US sessions.

Gold Market Performance

Gold (XAU/USD) experienced intense volatility last week due to multiple influencing factors:

Early Week Performance: Gold faced pressure from strong retail sales data and dollar strength, with prices initially retreating toward $3,300 per ounce.

Powell Rumor-Driven Volatility: On July 16, Powell dismissal rumors sparked safe-haven demand, driving gold prices up over 1% in a short burst, breaking through $3,350 per ounce and hitting an intraday high of $3,377.31 per ounce.

End-of-Week Decline: As Trump denied the replacement rumors, risk appetite returned, and gold prices fell on Thursday (July 17), closing down 0.26% at $3,344 per ounce. Technical indicators show RSI at elevated levels, suggesting short-term overbought conditions that could trigger a pullback.

Future Gold Trading Guidance

1. Macroeconomic Analysis

From a macro perspective, gold's future trajectory will be driven by several factors:

Federal Reserve Policy: The Fed currently maintains rates at 4.25%-4.50% while remaining cautious about inflation. Tariff-induced imported inflation may push CPI higher in coming months, limiting Fed rate cut room. If inflation persists above 3%, the Fed might delay cuts, pressuring gold prices. However, escalating geopolitical risks or economic data showing recession signs could prompt earlier rate cuts, boosting gold's safe-haven appeal.

Geopolitical and Tariff Risks: Trump's tariff policies (new tariffs on multiple countries starting August 1) will continue supporting gold's safe-haven demand. US-China trade tensions and geopolitical uncertainty could drive gold prices higher. J.P. Morgan forecasts gold potentially reaching $3,675 per ounce in Q4 2025, and $4,000 per ounce by mid-2026.

Central Bank Gold Demand: Global central banks purchased 450 tons of gold in the first half of 2025, up 15% year-over-year. This structural demand will continue supporting gold prices, especially amid dollar reserve diversification trends.

2. Technical Analysis

Technical analysis shows gold currently trading in a $3,300-$3,400 upward channel, though short-term pullback risks exist:

Support Levels: Key support at $3,300 per ounce, with further support at $3,250 per ounce. Breaking below $3,250 could trigger further decline to $3,200 per ounce.

Resistance Levels: Overhead resistance at $3,400 per ounce. A strong volume breakout above this level could challenge the $3,600 historical high.

Technical Indicators: RSI approaching 70, indicating overbought risk. MACD remains in bullish territory but shows weakening momentum, warranting caution for short-term corrections.

Trading Strategies:

  • Short-term Trading: Buy on dips near $3,300 per ounce, with stop-loss at $3,280 and target at $3,400 per ounce.
  • Long-term Investment: Consider building positions on pullbacks to $3,250 per ounce, with long-term target at $3,675 per ounce (J.P. Morgan forecast).
  • Risk Management: Implement strict stop-losses to avoid severe volatility from sudden events like tariff negotiation developments or Fed policy shifts.

Summary

Last week's US economic data revealed economic resilience alongside inflation pressures. Powell dismissal rumors temporarily boosted gold prices, but subsequent market stabilization led to price retreat. Looking ahead, tariff policies, geopolitical risks, and central bank gold demand will continue supporting gold prices, though Fed caution and dollar strength may create short-term pressure. Technical analysis suggests near-term pullback risks, but the long-term bullish trend remains intact. Traders should closely monitor upcoming July CPI data, Fed official speeches, and geopolitical developments while flexibly adjusting trading strategies.

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