Gold is currently trading around $4,020, which is 28% lower than its peak of $5,598 in January. Investors are watching closely before the Federal Reserve announces its decision on Wednesday. Looking ahead to August 2026, the future price of gold will likely depend on two important technical levels.
Looking at the market right now, I’m seeing some weakening in short-term momentum. However, the unusually low level of market swings tells me a significant price move is likely coming soon. What’s interesting is that despite large outflows from ETFs, continued buying from central banks is helping to balance things out.
Fed Decision on July 29 Sets the Tone
The Federal Open Market Committee (FOMC) will announce its decision on interest rates on Wednesday, July 29th. According to data from CME FedWatch, most traders expect rates to remain steady, with a 64.2% chance of no change. However, there’s still a significant 35.8% chance that the FOMC will raise rates.
Even though everyone – all 104 economists polled by Reuters – thinks the Federal Reserve will hold steady on interest rates right now, I’m still a little worried they might hike them anyway. Inflation did come down in June to 3.5%, and core inflation is at 2.6%, which is good, but Jerome Powell isn’t giving any signals he’s considering changing course. He seems pretty determined to stay tough on inflation, and that keeps the risk of another rate increase alive for me as an investor.
Some people looking at today’s results might think we’ve already succeeded and things are going great. However, I don’t agree with that assessment.
Warsh made the comment after the June inflation report, as reported by CNBC.
Global political events are also playing a role. The recent decrease in fighting between the US and Iran caused oil prices to fall about 6% and reduced worries about rising inflation. However, if those talks fail, it could lead to increased demand for safe investments and potentially push the Federal Reserve to raise interest rates again in August.
ETF Outflows Slow While Central Banks Keep Buying
Rising interest rates that are expected to stay high for an extended period have caused a decrease in demand for Exchange Traded Funds (ETFs). Gold ETFs listed in the US experienced about $5.3 billion in investor withdrawals last month. Looking at a three-month trend, flows shifted dramatically from almost $30 billion in February to net outflows. Approximately 298 tonnes of gold held by these ETFs are currently trading below their purchase price, around $4,000.
The chart shows that the recent decrease in flow is slowing down and was almost nonexistent by late July. Instead of increasing, selling pressure seems to be easing as the price holds steady around $4,000.
Central banks are stepping in as buyers, purchasing a combined 244 tonnes of gold in the first three months of the year. A recent survey by the World Gold Council shows that a record 45% of them intend to buy even more. In addition, fund managers believe gold is currently undervalued – more so than it has been since March of last year.
Weekly Charts Confirm Gold Bear Market
The market currently favors sellers. In June, gold fell below a key support area between $4,300 and $4,400 and that area is now likely to act as a barrier to further price increases. Currently, the price is hovering around $3,943, which is also near a support level between $3,900 and $4,000.
Gold prices have been falling and have now stayed below their average trend line for three weeks in a row. This confirms a downward trend that started back in mid-July.
The weekly Relative Strength Index (RSI) is suggesting further price declines. In early June, it fell below an upward trendline that had been in place since September 2022 and currently stands at 37 – a level not seen since late 2023. This, along with the 28% drop in value, indicates we may be in a bear market.
In my research, I’ve noticed that readings around 37 have coincided with significant low points in the market cycles of both 2022 and 2023. This leads me to believe that the current downward trend might be losing steam and isn’t likely to pick up speed significantly. We may be approaching a point where the selling pressure starts to ease.
Gold Price Outlook Hinges on $3,900 Support
Looking at the daily price chart, a critical decision point is approaching for gold. The price has repeatedly failed to break through resistance around $5,598, creating a downward trendline. This trendline is now meeting with a key support level between $3,900 and $4,000. Additionally, gold’s price is currently 10.4% below its 200-day moving average, and that average is starting to point downwards, suggesting further potential declines.
Looking at the market right now, I’m seeing the Bollinger Band Width Percentile indicating that volatility is decreasing and we’re entering a period of consolidation – what some call a ‘squeeze’. Historically, these squeezes don’t last; they’re usually followed by a significant price move, either up or down. In my view, the upcoming FOMC decision is the most likely catalyst for that breakout.
If gold’s price stays above its recent low and manages to break back above the upward trendline, it could initially rise to between $4,300 and $4,400. Hitting the $4,333 mark would represent roughly a 7.8% increase. JPMorgan analysts predict a price of $4,500 by the end of the year, which is slightly higher than this potential resistance zone.
As an analyst, I’m watching closely to see if Bitcoin can hold above $3,900. If we close a day below that level, it would suggest my bullish outlook is incorrect. In that scenario, I’d expect to find some support around $3,552 – a key technical level. Below that, there’s another potential support area between $3,300 and $3,400.
In early August, gold is fluctuating within a narrow trading range, defined by a four-point trendline and a key support level. The direction gold takes – whether it breaks above the trendline or falls below the support – will likely determine its performance for the next three months.
2026-07-29 16:13