Gold is 2025’s best performer. UBS sees more upside
On Monday, gold edged higher, after finding stiff resistance at $3396, tested a low at $3370, just below the immediate support at the 50 DMA at $3380, resulted in the formation of a bearish hammer in the daily chart, despite some reversal, gold futures are still sustaining below the 50 DMA on Tuesday which indicates weakness to persist till the U.S. President couldn’t succeed in establishing ceasefire between Russia and Ukraine.
I anticipate that if a Ukraine deal is reach that involves European countries taking up the burden, a sell off likely to start in gold futures as the futures are still trading below the immediate support which is likely to turn into a significant resistance if the gold futures continue to sustain below this on Tuesday and Wednesday as there was not a critical breakthrough while the U.S. President Donald Trump met his counterpart Russian President Vladimir Putin.
Undoubtedly, Trump had begun arranging a meeting between Ukraine’s Volodymyr Zelensky and Russia’s Vladimir Putting and floated a subsequent three-way discussion, keeping alive hopes for a pathway to negotiations which is possibly within two weeks, seems to be quite supportive for the gold bears to remain in command while the markets are also looking this week to the Federal Reserve’s annual symposium in Jackson Hole for any clues on the likely path of interest rates.
Fed Chair Jerome Powell is scheduled to speak on the economic outlook and the central bank’s policy framework, as concerns about surging stagflation loom over the global economy due to the ongoing impact of recently imposed tariffs by the US.
Technical Levels to Watch
In a daily chart, gold futures are teetering in a narrow range, after a steep fall on Monday when the gold futures pierced the immediate support at the 50 DMA at $3380 despite a bounce to test the immediate resistance at $3396, resulting in the formation of a bearish hammer.
On Tuesday, despite a little bounce back from the day’s low at $3370, gold futures are trying to sustain above the 50 DMA, but if gold futures once again find a breakdown below this significant support today and sustain there on Wednesday too, the 50 DMA is likely to turn into a stiff resistance for the gold futures.
Undoubtedly, if the gold futures try to test the next support at the 100 DMA at $3330 in a day or two, some bounce back could follow, but a breakdown below this significant support could push the futures to test the next significant support at the 200 DMA at $3061 before August 28, 2025.
In a 1-Hr. Chart, gold futures are showing extreme weakness as trading below the 50 DMA, after the formation of a bearish crossover as all the moving averages have gone down below the 200 DMA at $3414, ensuring a breakdown by the gold futures below the immediate support at $3369 is likely to start in a short while.
Disclaimer: Readers are advised to take any position in gold futures at their own risk, as this analysis is based only on observations.