Gold Continues to Consolidate – Which Way Will It Break?

Gold remains range-bound as markets digest a mix of macroeconomic headlines and generally weak summer trading volumes. Despite some intraday wobbles, the metal remains supported at key levels, evidence that investor caution on inflation, central bank policy, and global tensions continues to underpin demand.

Price action has been relatively choppy, with gold meandering between well-established technical levels. It is now hovering near its 50-day moving average (in USD), a position that tends to act as a pivot point. Whether it acts as a springboard for higher action or caps further upside will likely depend on the next catalyst.

In the meantime, AU$4,900 is acting as a good support level, the lower boundary of the consolidation range that has defined the market over recent months. As long as the level continues to hold, the broader technical outlook remains positive, and buyers have kept showing up on small pullbacks.

On the other hand, a break above AU$5,200 would indicate fresh bullish momentum and initiate AU$5,350, an important resistance level that has capped the top of the present trading range and has psychological significance.

Sentiment remains subdued, as is typical in the quieter northern hemisphere summer. Thin liquidity and waiting to see what happens are typical at this time. Although the recent EU-US trade agreement did offer a temporary fillip to risk appetite more broadly, gold has yet to move with conviction.

All the same, the medium-term trend is still intact. This phase of consolidation is a pause and not a pivot. With inflation stubborn, central banks still defensive, and geopolitical risks ubiquitous, investors still see any weakness in gold as a buy opportunity.