Gold surges to a new all-time high: Opportunities and risks amidst a bullish trend
The gold market is once again in the spotlight! In early Asian trading on Tuesday, the XAU/USD pair briefly approached the crucial $3,500 mark, hitting a new all-time high, buoying market sentiment. As a long-time gold analyst, I’m both excited by the bulls’ strength and wary of a potential technical pullback. Below, I’ll analyze gold’s current situation and future trends from both a news and technical perspective.
🔥 News: Multiple positive factors boost gold prices
The fundamental driver of this recent gold rally is rising market expectations for a Federal Reserve rate cut. According to the CME FedWatch tool, the market’s probability of a 25 basis point rate cut in September has soared to 89%. This near-certainty has led to a surge in funds pouring into gold, seeking safe haven and yield.
Furthermore, Trump’s recent dismissal of Federal Reserve Governor Lisa Cook has sparked market concerns about the Fed’s independence. This political uncertainty has further strengthened gold’s safe-haven appeal. Furthermore, uncertainty surrounding US tariffs, the Russia-Ukraine conflict, and escalating geopolitical tensions in the Middle East have all provided additional support for gold.
Notably, despite the recent modest rebound in the US dollar, this has not effectively dampened gold’s upward momentum. This suggests that gold’s current strength is based on the dual foundations of falling real interest rates and rising global risk sentiment.
This week, the market will closely monitor the US ISM manufacturing PMI and non-farm payroll data. Weak data would further reinforce expectations of a rate cut and fuel a breakout in gold prices. Strong data could trigger a short-term correction, testing support levels.
📈 Technical Analysis: Key Positions Following a Strong Breakout
From a technical perspective, gold broke through its all-time high this morning, marking its sixth consecutive day of gains on the daily chart, demonstrating strong bullish momentum. However, the RSI indicator is currently approaching overbought territory, suggesting the possibility of short-term technical consolidation or a pullback.
Daily Chart: Gold prices accelerated upward after breaking through the previous high of $3,440, with current major resistance around $3,510. If prices can successfully break through this level, the next target will be the $3530-3550 range. Meanwhile, key support lies at $3465. As long as gold prices hold above this level, the overall trend remains bullish. If it fails, it could enter a short-term correction, potentially testing the $3455-3440 support zone.
4-Hour Chart: The MACD double-line crossover, with the moving averages aligned in a bullish pattern, suggests buyers are currently in control. However, caution is warranted as gold prices have experienced a rapid pullback after surpassing $3500. A break below $3470 could signal a weakening short-term trend.
Overall, gold is currently in a “strong but consolidating” phase. Even if the trend is bullish, blindly chasing higher is not recommended. A better strategy would be to wait for a pullback to confirm support before entering a long position, or to test the waters with a light position at high levels to capitalize on pullback gains.
🧭 Trading Strategies: Invest primarily on dips, supplemented by higher rebounds.
To me, the current gold market presents numerous opportunities, but it’s important to remain calm. My suggestion is:
Upper resistance: $3500-3510
Lower support: $3465-3455
If gold prices pull back to the $3465-3455 area and show signs of stabilization, consider entering a long position with a target above $3500. If prices rebound to around $3510 and stagnate, consider a small short position to capitalize on a technical pullback.
💡 Final Conclusion
Gold’s recent surge is the result of a convergence of fundamentals and technicals. Expectations of a Fed rate cut, geopolitical risks, and market sentiment have all contributed to the surge in gold prices. As a rational trader, I always believe that trends are our friends, but even friends need a break.
In a strong market, patience is more important than impulsiveness. Waiting for entry opportunities after a pullback can both control risk and increase your winning rate. Gold’s medium-term trend remains upward, but short-term fluctuations are inevitable. I urge everyone to maintain discipline and flexibility in their trading to capture trends while mitigating risks.
Wishing you all smooth trading and steady profits!
