Technical Patterns

Gold has hit a new all-time high, gaining momentum since Friday. The lack of strong negative factors has supported its upward movement. However, the Federal Reserve’s outlook did not match market expectations for lower rate cuts. If strong US economic data comes out, we might see a shift to a more aggressive stance, possibly leading to a price drop like last year. In the long run, gold is likely to stay on an upward trend as real yields continue to fall due to the Fed’s accommodative strategy. Temporary pullbacks may happen if interest rate forecasts change. Looking at the daily chart, gold has reached a historic high. Buyers have a good risk-to-reward opportunity near the major trendline, while sellers are aiming for a breakout below, targeting the 3,120 level. On the 4-hour chart, gold’s price has bounced off a minor upward trendline at around 3,630. Buyers are likely to use this trendline to seek new highs, while sellers aim to break lower. The 1-hour chart shows resistance near the 3,723 level that may attract sellers looking for a price drop. Upcoming US economic reports, such as Flash PMIs, Jobless Claims, and the PCE report, could move the market. Gold is pushing to another all-time high, but this momentum could change quickly. The market is currently anticipating more rate cuts from the Federal Reserve than what was indicated in their last meeting. This difference poses a key risk; any strong economic data could trigger a fast reassessment. With US Core PCE inflation for August 2025 remaining high at 2.9% and jobless claims steady at approximately 215,000, the economic reports coming this week are crucial. We might consider buying put options or selling call spreads to prepare for a possible short-term decrease. This strategy would take advantage of a hawkish shift in interest rate expectations ahead of Friday’s PCE data.

Strategic Positioning

We observed a similar pattern in the autumn of 2024. A series of strong job reports then led to a quick 5% correction in gold as the market adjusted to the Fed’s policy. This past experience suggests that a pullback could provide a better chance to enter longer-term positions. While a correction seems likely, the overall outlook for gold remains positive as long as real yields are expected to drop. Thus, a pullback toward the major trendline support could be a good opportunity to buy longer-dated call options. This would let us re-enter the main upward trend at a more favorable price. Create your live VT Markets account and start trading now.

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