Gold: Overbought Levels Poised to Test Bullish Momentum Ahead of Fed Meet

After reviewing the movements of the gold futures in a daily chart, I anticipate that despite a rally, started on Sept. 4, 2025 from the lows of $3573 which looks ready to end this week on announcement of interest rate cut of 25 basis points by the Federal Reserve on Sept. 16-17, as this expected rate cut has already been factored in current price level of the yellow metal.

Undoubtedly, gold futures are currently trading inside an overbought territory which seems to be like a bulls trap, constructed by the big bears who look extremely alert to slash the heads, whenever the bulls try to peep above the immediate resistance at $3686 since Sept. 8, 2025, indicates a thick presence of bulls and bears at this pivotal point as the gold bugs are still expecting a jumbo cut of 50 basis point by the Fed in its meeting this week.

I find that the Federal Reserve could be conservative enough to slash the interest rate speedier as the Fed members look focused to map the impact of Trump’s trade tariff, while the related mushrooming problems like deporting immigrant labor could hamper production, and the import cost will decline consumer spending.  I have explained this phenomenon in detail in my latest analysis.

On the other hand, the Japanese central bank looks reluctant to hike interest rates to escape the jolts of the trade tariff tussles, which might hamper global growth, while the European central bank is likely to follow the US rate cut with a different pace in near futures, according to prevailing inflation at the end of this year and in 2026.

The Central Bank of China looks ready to meet the declining global growth by adopting de-dollarization by promoting the use of PetroYuan to purchase oil from Saudi Arabia and some other Middle East countries, along with promoting trade ties with India and other developing countries.

I find that the Federal Reserve will not start cutting interest rates at the same speed despite surging political pressure, as the US dollar seems to be weakening sharply amid surging fear of the aftermath impacts of Trump’s trade tariffs.

Technical Levels to Watch

In a daily chart, gold futures are trying to hold the immediate support at the 9 DMA at $3664 despite a stiff resistance at $3686, indicating a surge in bearish pressure at the current level, which could push the futures to test the next support at $3617 in today’s session.

Inversely, if the gold futures find a breakout above the immediate resistance at 3686, the next target could be at $ 3715, but any such move will attract big bears to load fresh shorts with a stop loss at $3743 for a target at $3545 this week.

In a 1-hr. chart, gold futures are trying to hold the immediate support at the 50 DMA at $3677 where a breakdown looks ready to push the futures to test the next support at the 200 DMA at $3653 as the 9 DMA, 20 DMA have pierced the 100 DMA while thrice of them could pierce the 50 DMA in a short while due to the formation of a bearish crossover.

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