Gold Falls into Summer Trap

Gold prices climbed 2.4% to $3,352 per troy ounce this week, largely recovering from last week’s decline. A similar pattern played out earlier when gold surged to $3,450 on reports of U.S. airstrikes against Iranian nuclear facilities, only to retreat by 2.0% to $3,360. The yellow metal appears to be running flat, failing to break above resistance at $3,430–$3,450 even at the peak of geopolitical tensions, and bouncing off support at $3,230–$3,250 after strong U.S. Personal Consumption Expenditures (PCE) inflation data. These moves have shaped a consolidation pattern within the $3,250–$3,450 range. When connected with the February 28 low, the structure resembles a large ascending triangle, though it’s too early to confirm a classic breakout. The pattern is likely to continue developing into mid-August. With trading activity slowing and the price range narrowing, a deceptive breakout—possibly a false move—is likely closer to autumn. In this context, medium-term long or short positions should be either closed or hedged.

Currently, gold is trading around $3,330–$3,350, near the middle of its consolidation range. A decisive move is unlikely, as the market appears set to revisit both $3,250 and $3,450 levels again. For short-term speculative trades, watching for bounces off these boundaries could offer solid opportunities. In the immediate term, there are more reasons to expect an approach toward the $3,450 resistance. Trade talks between the U.S. and both the EU and Japan remain unresolved ahead of the July 9 deadline. Continued tensions tend to boost gold prices. In addition, Donald Trump’s Big Beautiful tax bill, which includes significant new tax cuts and raises the debt ceiling by $3.4 trillion, has passed the Senate and may be signed by the president before July 5. The expected ballooning of U.S. debt undermines long-term confidence in fiscal stability, providing another tailwind for gold.

Macroeconomic factors could also play a role this week. While manufacturing PMI data beat expectations, the ADP Nonfarm Payrolls (NFP) figures came in weak. All eyes are now on the official June jobs report, due Thursday before the Independence Day holiday. Expectations point to a slight uptick in unemployment to 4.3% from 4.2%, and a drop in NFP to 111,000 from 139,000. Internal models suggest a possible NFP print anywhere between 15,000 and 111,000, implying increased downside risk. Such data could reinforce the case for a Federal Reserve rate cut in July, thereby supporting gold.

However, institutional investor behaviour signals a pause. The SPDR Gold Trust (GLD) ETF saw $498.4 million in net inflows last week, the fourth straight week of strong buying. But in the first half of this week, outflows have reached $695.4 million, suggesting large players are taking profits off the table after entering near $3,250. While this doesn’t rule out further gains, it does point to a shift into a summer consolidation phase.