Gold market analysis

"Gold Price Seriously Overbought, Crash Imminent" 4/9/2025 9:53 Finalized 

Gold prices have hit new highs for the third consecutive day. The spot price of gold rose to $3,578.5 in the New York midday session yesterday. This rally, which began on August 22, shares similarities with the one that started on April 9 from $2,970. That rally lasted for nine trading days, reaching a peak of $3,500, with a total increase of $530, averaging about $59 per day. This current rally, which started from a low of $3,321 on August 22, is driven by speculation that the Federal Reserve may cut interest rates as early as this month. So far, gold prices have risen by nearly $240 over nine trading days, averaging an increase of about $28 per day, which is less than the average daily fluctuation of around $30 in the past. 

Gold hit a temporary low of $3,552 in the early Asian session today, down $26.5 from the high of $3,578.5 in the New York session last night. The trend is similar to that from August 27 to 29. However, on August 27, gold peaked at $3,394 at 6 a.m. and bottomed out at $3,374 at 12 p.m., falling by $20. On August 28, gold also peaked at 6 a.m., touching $3,399 before falling, but the lowest point was only $3,384.7, and it rebounded after a drop of more than $15. On August 29, gold hit a high of $3,423 at 3 a.m. and began to fall, continuing until 7 p.m., when it bottomed out at $3,404.5 before rebounding, with a maximum drop of $18.5. 

SPDR reduced its holdings, with short positions in gold accounting for 58%. 

The gold price has experienced the largest adjustment this round. It can be confirmed that investors have taken profits and exited the market in advance before the release of the US ADP employment data. If the data is not too good and the gold price does not reach a new high today, it is highly likely that the gold price has peaked. Data shows that the proportion of short positions held by investors in gold has reached 58.4%, which is significantly different from the previous situation where long and short positions were evenly split. The SPDR Gold ETF also reduced its holdings by 6.3 tons on September 3rd. 

Gold prices tend to retest the $3,500 level. 

I personally believe that the gold price has peaked and is likely to decline in the short term. From the four-hour chart, if we adjust for the 50% retracement of the largest increase since August 22nd, the gold price will reach $3,450, which is also my initial short-term target for the gold price adjustment. In terms of overbought conditions, the 9RSI on the daily chart is still as high as 82, on the monthly chart it is 91.5, and on the quarterly chart, the 9RSI has also reached 90, which is the most severe in history. Therefore, it is certain that the gold price is about to collapse! Considering the increase from the lowest point of $1,616.18 in November 2022 to the highest point of $3,578.5 yesterday, I expect the gold price to adjust by 50% of the above increase to $2,597 as the medium and long-term decline target. In the short term, $3,564 is the first resistance level, and the first support level is $3,525. However, I believe that the gold price will test $3,500 in the short term and may even fall below that level. It is possible that $3,450 will be reached within the next two days. 

The above content is for reference only and does not constitute investment advice. 

MTF Special Analyst Zheng Guangfu