Gold Strongly Breaks Through $3,600, Maintaining a Bullish Trend
During the European trading session on September 8th, spot gold continued its recent strong performance, breaking through the $3,600/ounce mark in London, reaching a high of $3,622.49/ounce, continuing the upward trend since the release of the non-farm payroll data. The current gold price has risen 38% since the beginning of the year, maintaining a solid bullish trend.
1. Drivers: Weak employment data boosts interest rate cut expectations
The core driver of this round of gold price increases is the unexpected deterioration in the US labor market. The latest data shows that US non-farm payrolls increased by only 22,000 in August, far below the market expectation of 75,000, and the unemployment rate rose to 4.3%, a new high since 2021. More importantly, the June data was significantly revised downward to a decrease of 13,000, the first monthly decline since December 2020.
This series of data significantly reinforced market expectations of a Federal Reserve rate cut. According to the Chicago Mercantile Exchange’s FedWatch tool, the market is pricing in a 99% probability of a September rate cut of at least 25 basis points. Institutions such as ING predict that the Fed may cut interest rates three times before the end of the year, and even don’t rule out a direct 50 basis point cut in September.
II. Technical Structure: The bullish trend is solid, and pullbacks present opportunities.
From a technical perspective, gold closed with a large bullish candlestick on the weekly chart, not only confirming its medium-term upward trend but also effectively breaking through the key psychological level of $3,600. Currently, gold prices remain firmly above this level, presenting two possible paths: one is a direct acceleration of gains. If another large bullish candlestick is closed this week, it could signal an accelerated upward move. The other is a breakout from a high, followed by a spinning candlestick or doji candlestick pattern, followed by a brief consolidation before a renewed upward push. Regardless of the scenario, gold’s overall bullish trend remains unchanged.
The daily chart shows that although last Friday saw the first bearish candlestick after a series of consecutive gains, this was merely a technical correction within the strong trend. Gold prices have consistently held support at the 5-day moving average, and Monday’s continued positive close indicates strong bullish momentum. The 4-hour chart shows a strong upward trend after consolidating from a high, with $3,620 acting as a key short-term support level. The hourly chart shows a slow bull market, with pullbacks being short and limited. The technical pattern has regained momentum after consolidation.
III. Outlook and Trading Strategies
Market focus has now shifted to key events this week: the annual benchmark revision of the non-farm payroll data to be released on September 9th (expected to be a downward revision of 600,000-900,000 jobs) and the August CPI data to be released on September 11th. These two data points will directly influence the extent of the Federal Reserve’s September interest rate cut.
Gold currently maintains a strong bullish trend. Trading strategies recommend buying on dips. Short-term resistance is expected to be in the 3,670-3,680 area above, with a breakout likely to challenge the $3,700 mark. Support is key below, with 3,635-3,625 as the key support level. Overall, every technical pullback should be viewed as an opportunity to enter a long position.
