Gold: Continues to trade with heavy bearish bias – OCBC

Gold has continued to trade with a heavy bearish bias as tariff de-escalation momentum gained pace, while Fed cut expectations was scaled back in terms of the timing of next cut and quantum. Gold was last at 3174.52 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note.

Downside risks intact

"The other driver may have been the misinformation about Gold being re-classified as Tier 1 HQLA under Basel III as of 1 July (which may have partially contributed to the earlier run up in Gold price). Tier 1 refers to capital rules while HQLA is a function within the liquidity rules of LCR and NSFR."

"As it is, Gold is already a Tier 1 asset under the Basel Capital Accords, but Gold is not due to be reclassified as a Level 1 HQLA. So far, no announcement has been made, though there was proposal/research to suggest that Gold meets all criteria to warrant Level 1 HQLA status. Further unwinding of long position is not ruled out should market expectations for Fed cut further pare back and/or de-escalation picks up pace."

"Bearish momentum on daily chart intact while RSI fell. Downside risks intact. Support at 3150 (50 DMA), 3050 levels (50% fibo retracement of 2025 low to high). Resistance at 3230, 3288 (23.6% fibo)."