Gold Looks Ripe for a Pullback Amid Potential Profit-Taking

On Tuesday, gold futures tested a new high at $3578, as investors prepared for a week of economic data, including the crucial U.S. labor report on Friday.

Undoubtedly, markets widely expect the Federal Reserve to lower interest rates later this month, pricing a 89% chance of a 25 basis point cut, but data this week will help investors gauge whether the central bank could lean towards a larger cut.

I anticipate that the focus will be on Friday’s U.S. nonfarm payrolls report, which will be preceded by data on job openings and private payrolls, providing investors and the Fed to a clear picture of the labour market that has become the centre of policy debate while the currently prevailing economic scenario, indicating a “stall” state of the global economy, a period when growth decelerates enough to raise recession risks without confirming one is underway.


But, I find that despite a bumpy move on Tuesday, gold futures are still trading in the lower uptrend zone since June 30, 2025 which makes the technical formations evident enough to advent of a selling spree on Tuesday itself as the gold futures are currently facing stiff resistance at $3578 as the formation of an exhaustive candle in a daily chart confirms an advent of a selling spree on Tuesday itself, if the gold futures are not able to defend the immediate support at $3534 on Tuesday, exhaustion will be steeper to test the next support at $3510 where a breakdown will likely to continue this slide.

Undoubtedly, gold futures could experience indecisive moves from Wednesday, but the directional bias would be bearish as the overexcited bulls have pushed the gold futures into the overbought territory, where the yellow metal loses its safe-haven potential at such high prices, as the investors feel uneasy holding this non-yielding asset for a long time after buying it at costlier prices.

I anticipate that any positive news on the adoption of an accommodative trade policy on the tariff front by U.S. President Donald Trump to boost the weakening dollar could provide a new jolt to overexcited gold bulls as the big bears are loading fresh shorts above $3494, and a breakdown below this could turn the slide steeper.

Undoubtedly, the recent developments on Trump’s move to politicize the FOMC sparked increased uncertainty over the economic impact of Trump’s tariffs, a bulk of which took effect in August. Any ruling against the tariff will also force Washington to negotiate recent deals with major trading partners.

On the other hand, persistent bets on a September rate cut also boosted gold, even as data released last week showed inflation remained sticky while the Fed Chair Jerome Powell had signaled earlier in August that the Fed was considering a 25 bps reduction in September, but had still not committed to the move amid concerns over sticky inflation.

Finally, I conclude that such over excitement of the gold bulls seems to be temporary as the surging hopes of a mega cut are based only on expectations, which could find a sudden jolt any time as the currently prevailing geopolitical moves could take a tilt any time.

Disclaimer: Readers are advised to take any position in gold at their own risk, as this analysis is based only on observations.