Gold Price Recovers After Sudden Drop Amid US-EU Trade Deal

Spot gold traded modestly higher at around $3,342.7 per ounce on July 28, 2025, partially recovering Friday’s sudden decline. Friday witnessed a sharp fall in gold prices, shedding nearly 1% to close at $3,336 per ounce.

This drop marked one of the steepest daily losses in recent months, catching markets off guard after a bullish run had suggested a breakout might occur.

The sudden reversal followed optimism over the U.S.-EU trade deal that significantly cooled safe-haven demand. Traders shifted focus from risk-averse gold to equities and currencies, which rallied on the trade agreement news.

The finalized tariff rate of 15%, lower than expected, further encouraged investor risk appetite, weakening demand for gold as a protective asset. Technically, gold prices remain within a broader consolidation phase, ranging roughly between $3,250 and $3,400.

On the daily chart, the price action has returned to the midpoint near $3,340, confirming the lack of sustained bullish momentum. The Relative Strength Index (RSI), now around 50, indicates a neutral market, neither strongly overbought nor oversold.

The four-hour chart reveals a clear triangular correction pattern, suggesting further price consolidation. Moving Average Convergence Divergence (MACD) signals weakening bullish momentum, reinforcing expectations of continued sideways trading.

Bollinger Bands, closely watched for volatility, tightened significantly, confirming reduced market movement and cautious investor sentiment.

Another critical indicator, the Global Liquidity Index NDQ, represented by the yellow line, is trending sideways, reflecting limited liquidity changes.

Stable liquidity aligns with current market hesitation, as investors await further macroeconomic signals or clearer central bank policy guidance.

Fundamentally, gold maintains support from institutional inflows, driven by central banks actively increasing their reserves. Central bank buying has persisted for eight consecutive months, supporting gold’s longer-term prospects.

Furthermore, gold’s reclassification under Basel III as a Tier-1 asset reinforces its appeal for institutional portfolios. Despite Friday’s decline, technical and fundamental analyses suggest gold has not entered a definitive bear market phase.

Investors appear cautious, focusing more on selling into rallies rather than initiating long positions. Future market movements hinge significantly on upcoming U.S. economic data, Federal Reserve actions, and further developments in international trade agreements.

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