By Rania Gule, Senior Market Analyst at XS.com – MENA
August 19, 2025: Gold is currently experiencing sharp fluctuations between supportive and restrictive factors, placing investors in front of a complex and ambiguous scene. During today’s Asian session, the precious metal benefited from some buying activity, moving away from its lowest level in more than two weeks, but it quickly lost momentum amid a lack of bullish confidence. The reason lies not only in the anticipation surrounding U.S. monetary policy decisions but also in the geopolitical environment that continues to send contradictory signals between risk and reassurance.
Expectations of a Federal Reserve rate cut remain the cornerstone of gold’s movement. Projections point to a strong probability of a 25 basis-point cut in September, with the likelihood of another cut before the end of the year still on the table. Such expectations are essentially supportive of gold, as lower real yields reduce the attractiveness of the dollar and bonds, boosting demand for non-yielding assets. However, the picture is not that straightforward, since the latest U.S. producer price and inflation data came in stronger than expected, raising concerns that the Fed might pause or slow the pace of monetary easing. In my view, these conflicting signals will keep gold volatile in the short term—unless Jerome Powell delivers a clear and decisive message at Jackson Hole regarding the policy outlook.
Although the dollar has benefited from these data and held at relatively strong levels, this resilience has not yet turned into a solid upward trend. Markets appear hesitant: on the one hand, inflation remains elevated, and on the other, signs of economic slowdown cannot be ignored, which may eventually push the Fed to cut rates. This dilemma partly works in favour of gold, as it prevents the dollar from surging in a way that heavily pressures the metal, but at the same time deprives gold of a strong and clear bullish catalyst. I believe that any sudden weakness in U.S. growth or labour market data could mark a turning point in favour of gold, while any new strong inflation reading would weigh against it.
Alongside the monetary factor, geopolitical developments cannot be overlooked. Reports of a potential meeting between Russian President Vladimir Putin and his Ukrainian counterpart Volodymyr Zelensky, alongside Western diplomatic efforts, have revived hopes for peace and eased investor anxiety. This development weighs on gold as a haven, as it curbs defensive demand that typically emerges during crises. However, I do not see this issue as resolved or leading to a quick de-escalation, as experience shows that the path to peace is riddled with obstacles. Accordingly, gold may retain part of its geopolitical risk premium, even with positive signals on the negotiation table.
On the credit rating front, Standard & Poor’s maintained the U.S. sovereign rating at stable levels with a non-negative outlook, despite pointing to high deficits and public debt nearing 100% of GDP. In my assessment, this signal carries two implications: first, markets are unlikely to face an imminent U.S. sovereign shock, which reduces immediate demand for gold; second, mounting debt remains a ticking time bomb that undermines long-term confidence in the dollar and restores gold’s shine as a strategic hedge asset. From this perspective, I believe gold continues to play a pivotal role in long-term portfolios, even if its short-term gains remain muted.
Attention is now turning to two key events that will shape the next stage: the Fed’s meeting minutes and Powell’s speech at Jackson Hole. Markets are expected to scrutinise every signal to determine whether the central bank leans toward a more hawkish stance or greater flexibility regarding rate cuts. Any clear inclination toward easing would ignite a bullish spark for gold and potentially push it above $3,400 per ounce, while a more hawkish tone may keep it confined to a tight range or even drive it to test support levels around $3,300. I tend to believe Powell will seek to strike a balance, keeping the door open for limited cuts while reaffirming his commitment to fighting inflation, which means the gold market will likely remain cautious and volatile.
In parallel, upcoming economic data such as PMI figures and housing indicators will further shape expectations about global growth. If these data confirm a broad-based slowdown, gold’s appeal as a defensive asset will grow. Conversely, stronger readings could reinforce confidence in the dollar at gold’s expense. Here lies the difficulty of predicting near-term direction: gold is not in a position to make strong breakouts either upward or downward, but instead moves within a sideways range awaiting a major external trigger.
Overall, I see gold currently caught between the Fed’s hammer and geopolitical optimism’s anvil. The supportive factors for an upside move exist but are not decisive, while the downward pressures are present but not sufficient to break support levels. Thus, the most likely scenario is that the metal will remain trapped in a range between $3,300 and $3,400 per ounce in the near term, with a slight downside bias if the dollar continues to benefit from inflation data. However, any unexpected signal from Jackson Hole—or a setback in peace efforts between Russia and Ukraine—could dramatically change the picture and reignite gold’s appeal as a haven.
Technical Analysis of Gold ( XAUUSD ) Prices:
The four-hour chart shows that gold remains confined within a narrow sideways range between $3,330 and $3,360 per ounce, with bullish breakout attempts failing so far. The visible price pattern (A-B-C-D) suggests the potential formation of a reversal setup, yet the inability to sustain above the R1 resistance level at $3,358 keeps selling pressure intact. Moving averages reflect clear indecision, as the price hovers around them without confirming a definitive directional trend.
Technical indicators, particularly the Stochastic RSI, are moving at relatively low levels, suggesting short-term oversold conditions that could support a limited rebound. However, a clear break below the S1 support at $3,331 would likely open the door for a deeper move toward S2 at $3,281. Conversely, if the price manages to surpass the first resistance, the probability of retesting R2 at $3,409 increases significantly.
Overall, the outlook remains neutral-to-bearish as long as the price holds below $3,358. Losing the $3,331 support could deepen the downside pressure toward $3,281, while a decisive break above $3,358 would serve as an early signal of a potential short-term bullish recovery.
Support Levels: 3,331 – 3,281 – 3,260
Resistance Levels: 3,358 – 3,409 – 3,440