Bullish momentum or breakdown? Gold at a crossroads

GOLD has long held its place as a strategic asset, valued not just for its scarcity and durability, but also for its reliability in times of macroeconomic stress.

Historically, it has served as a hedge against inflation, currency volatility and geopolitical risk. From central bank reserves to exchange-traded fund holdings and option strategies, gold spans retail and institutional layers of finance.

In today’s environment, where uncertainty around the US Federal Reserve’s policy and global trade dynamics continues to mount, gold remains firmly in focus for both institutional investors and retail traders.

Heading into the second half of 2025, gold appears to be at a technical inflection point. After rallying sharply in the first quarter of 2025 amid global economic uncertainty and aggressive central bank buying, XAU/USD is now trading within a tight range.

The key question here is: can the bulls maintain control, or is the bullish momentum starting to fade?

Technical landscape: chart set-up and price action

XAU/USD is consolidating within a range between US$3,245 and US$3,445. This price action forms an ascending triangle, typically considered a bullish continuation pattern in an uptrend. However, multiple failed attempts to clear the US$3,445 resistance level suggest the bulls are hesitating, with the market likely awaiting a fresh macroeconomic catalyst.

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Key levels

• Support levels: US$3,245, US$3,300, US$3,120;

• Resistance levels: US$3,445 (top of triangle), US$3,500, US$3,600.

Indicators

The 50-day Simple Moving Average (SMA) is sitting near US$3,300, providing a clear support during pullbacks while the 100-day SMA remains upward sloping, confirming the underlying bullish trend strength. The Relative Strength Index is hovering around 50, indicating neutral momentum.

Candlestick patterns show price are trading on a side trend (top of triangle), hinting that traders are in a “waiting” mode. This is consistent with the ongoing consolidation as traders await for fresh catalysts, in particular the progress on trade negotiations between the United States and over 20 countries.

Bullish scenario

Supported by the earlier occurrence of a golden cross, the 50-day SMA is currently trading above the 100-day SMA. With the price of XAU/USD trading above both SMAs, it reinforces the trend strength and suggests that dips continue to attract buyers.

A decisive breakout above US$3,445 could open the path towards the US$3,500 to US$3,600 resistance zone. If a clean close is seen above the US$3,500 resistance level along with rising volume, this will confirm renewed upward momentum in XAU/USD. Swing traders may look to US$3,600 as a take-profit target.

One of the fundamental reasons is the reigniting of global trade concerns by US President Donald Trump’s new tariffs on over 20 countries, including Canada and Brazil. Such tensions typically fuel demand for safe-haven assets, especially if retaliatory measures disrupt supply chains.

Additionally, central banks have added 50 tonnes of gold in the second quarter of 2025 led by China, India and Mexico (Bullion Mart, 2025). With 2025 expected to be the 16th consecutive year of net central bank gold buying, this structural demand remains a key stabilising factor for the market.

Bearish scenario

A loss of slope in the 50-day SMA, currently near US$3,330, would be an early signal of weakening short-term bullish momentum. A breakdown of the 50-day SMA below the 100-day SMA, a “death cross”, would represent a structural shift. Technical traders often interpret a fall below both moving averages as confirmation of a developing downtrend, prompting reallocation away from gold.

A breakdown below US$3,245 may be compounded by macroeconomic signals that strengthen the US dollar and weigh on gold. If geopolitical tensions ease, the US Dollar Index could regain strength, while the US 10-year yield remains elevated near 4.42 per cent; a hawkish cut from the Fed could push yields higher.

Rising yields will increase the opportunity cost of holding non-yielding assets like gold, especially for institutional portfolios seeking income.

The XAU/USD current technical set-up reflects a balanced market, with the bulls defending key support zones and bears capping upside momentum. This aligns with a broader tug-of-war between structural bullish forces and bearish risks.

A decisive break above US$3,445 could reignite the rally towards US$3,500 while a drop below US$3245 would shift the sentiment towards bearish.

Until either scenario unfolds, traders may see a continued range-bound action between the US$3,245 and US$3,445 levels. With macro catalysts looming in the background, traders should closely monitor developments to determine the next directional move.

The writer is a CFD dealer at Phillip Securities