On August 12, the spot gold price experienced a thrilling big dump, plunging 1.6% in a single day, with an intraday low of $3341.25 per ounce, marking a new low in over a week. This selling spree wiped out the impressive gains from last Friday’s historical high of $3534.1, leaving the market in shock.
As of August 13, the gold price stabilized around $3345/oz, up 0.17%. New York futures gold slightly retreated by 0.1%, reported at $3400, as the market entered a brief respite.
Policy fog dissipates, gold’s safe-haven premium evaporates
The core trigger of this big dump originates from the dramatic reversal of the U.S. tariff policy. On August 9, the market suddenly heard rumors that the U.S. would impose tariffs on gold bars from specific countries, leading to a panic buying surge that pushed futures gold to soar 4% in a single day, setting a new historical high.
However, just 48 hours later, the situation changed dramatically. U.S. President Trump made a clear statement on social media: "Gold will not be taxed." The White House also urgently clarified the previous "misinformation," stating that there is no gold tariff plan.
This policy reversal is like withdrawing the firewood from under the pot. The speculative funds that had flooded in due to trade war expectations are now concentrated in withdrawal, leading to a "false breakout" in the technical aspect. After a spike in gold prices, they quickly fell below the key support level of 3450 dollars, triggering a large number of stop-loss orders.
At the same time, the United States announced the extension of the "asymmetric ceasefire" of the 30% tariffs on Chinese goods and the 10% tariffs imposed by China on the U.S. for another 90 days. Although this action did not resolve the core contradictions, it temporarily alleviated market concerns about the "tariff spiral escalation," significantly weakening the appeal of gold as a hedging tool.
Breakthrough in Geopolitics, War Premium Under Pressure
The potential easing of geopolitical tensions has become the second driving force behind the big dump in gold. Trump will hold a summit with Putin in Alaska on August 16 to discuss ending the war in Ukraine.
On Monday, Trump publicly stated: "Both Kyiv and Moscow need to make territorial concessions to reach an agreement, and there will be some land exchanges." This tough statement, while implying the possibility of peace, immediately suppressed the safe-haven demand for gold.
European leaders and Ukrainian President Zelensky expressed deep concerns about this, fearing unfavorable terms proposed by Washington. If a substantial peace agreement is reached between Russia and Ukraine, the "war premium" accumulated by gold since the outbreak of the conflict may disappear, and a rebound in global risk appetite will further weaken gold’s appeal.
Inflation data weighs heavily, the Federal Reserve’s policy path remains uncertain.
Under the siege of multiple bearish factors, the market’s attention turns to the U.S. inflation data. The U.S. July CPI data released on August 12 has become a key variable: the core CPI rose by 0.3% month-on-month, pushing the annual rate up to 3%.
After the release of this data, the currency market’s expectation for the Federal Reserve to cut interest rates in September dropped from 90% to 85%, with the expected rate cut by the end of the year narrowing to 58 basis points. Gold is extremely sensitive to interest rate changes, and the decrease in the probability of rate cuts has directly dampened the appeal of the non-yielding asset, gold.
The US dollar index rose 0.24% to 98.48 before the data was released, reflecting a hawkish adjustment in the market prior to the announcement. The strengthening dollar further suppressed the price movement of gold priced in dollars.
Technically broken, 3340 USD becomes the Bull vs Bear Battle line.
From a technical perspective, gold prices have continuously breached key support levels during the big dump. After the psychological level of 3400 USD was broken, a large number of stop-loss orders were triggered, accelerating the decline to around 3340 USD. This price level is close to the ascending trend line formed in May 2025, becoming a key point in the Bull vs Bear Battle.
Reuters technical analysts point out that spot gold may further fall towards the range of 3314 to 3342 USD. On the daily chart, the gold price failed to break through the resistance level of 3396 USD, marking the completion of the rebound from 3268 USD.
Gold has formed a top after several days of consolidation below the resistance level of 3400 dollars, and channel technical indicators suggest a potential further fall to 3352 dollars. The bearish divergence in the hourly Relative Strength Index (RSI) indicates that the likelihood of the market returning to the high of 3408 dollars in the short term is low.
The glimmer in the eye of the storm, the mid-to-long term support logic remains intact
Despite experiencing a heavy fall, the medium to long-term support logic for gold has not completely collapsed. The probability of the Federal Reserve cutting interest rates in September still stands at 85% to 95%, and the low interest rate environment continues to support gold.
The continuous gold purchasing behavior of the People’s Bank of China provides additional support. According to a report by the World Gold Council (WGC), China has increased its gold holdings for the ninth consecutive month, adding 60,000 ounces in July, with a cumulative purchase of approximately 36 tons since November of last year.
Technical analysts point out that as long as gold prices remain above $3359 (6/8 Murray level), any pullback will be seen as a buying opportunity. From the H4 chart perspective, there is a key support level near $3382, where the 21-day simple moving average (SMA) is located, which may provide bullish momentum.
Future Outlook
New York futures gold slightly retreated to 3400 USD on August 13, while spot gold rose 0.17% near 3345 USD, as the market entered a brief period of calm.
The world’s largest gold ETF (SPDR Gold Trust) has seen its holdings decline for three consecutive days, with hedge fund net long positions in gold falling to a one-month low. Around $3300 has become a key node for short-term price movement, as investors await clarification on the Federal Reserve’s policy path.
The long-term rise of gold relies on the decline of real interest rates and geopolitical turmoil. In the year 2025, with high macroeconomic uncertainty, increased volatility has become the new normal in the gold market.
