Gold market analysis

"Gold Price at $3,500 Becomes a Strong Support" 3/9/2025 9:57 Completed 

Yesterday, the spot gold price rose to a high of $3,508.5 in the Asian market before falling. In the early London market, it dropped to around $3,470. However, the lowest point on the hourly chart was only $3,477, which is the key support level we mentioned yesterday. In other words, although the gold price fell from its peak, it did not meet the hourly chart's signal of a downward trend. Subsequently, the gold price fluctuated below $3,494. It was only after the release of the August ISM Manufacturing PMI in the United States, which was worse than expected, that the gold price climbed again. 

Despite this, the US ISM manufacturing PMI for August was 48.7, lower than the expected 49 but still higher than July's 48. The new orders index rose from 47.1 in July to 51.4 in August, with the employment index also slightly increasing from 43.4 to 43.8. Although the data indicates that the US manufacturing sector is still contracting, there has been some improvement. However, the US IBD/TIPP Economic Optimism Index dropped from 50.9 in August to 48.7 in September, reflecting that American consumers are pessimistic about the economic outlook, personal finances, and federal economic policies for the next six months. 

Political unrest has driven up the price of gold. 

Spot gold prices rose sharply after the release of the above data. Besides the US factors, the sharp fall in UK government bond prices and the pound's sharp depreciation due to the country's fiscal problems also served as reasons for funds to flow into the gold market for safekeeping. Additionally, the French far-right National Rally (RN) party stated that it is preparing for an early general election and expects the opposition to overthrow the minority government in the September 8 vote, which led to a sharp rise in French 30-year bond yields to their highest level since June 2009. 

The more unstable the political situation is, the more favorable it is for the gold price. The spot gold price rose to nearly $3,540 in the late afternoon of New York yesterday, exceeding my earlier calculated target of about $3,536 based on the breakthrough of the TD descending track. From the daily chart, assuming that the low of $3,268.15 on July 30 was the starting point of wave 1, wave 2 began on August 8 at $3,408.83 and ended on August 20 at $3,311.46, entering wave 3. Assuming that the amplitude of wave 3 is 1.618 times that of wave 1, the gold price will end wave 3 at $3,539.08 and then enter wave 4, with the maximum adjustment level being close to but above $3,408.83. 

The key short-term level is $3,528.5. 

Spot gold prices rebounded after hitting a low of $3,526.5 in the early Asian session today and reached a new high of $3,547. As the gold price has broken through $3,500, this level has become a new strong support level. Since the 3-wave rise in gold prices has reached 1.618 times the 1-wave rise, I remain highly vigilant about whether the gold price will experience a significant decline. Additionally, investors should not overlook that the 9RSI of spot gold prices has reached 84 on the daily chart and exceeded 91 on the monthly chart. Severe overbuying will eventually lead to a sharp drop in gold prices. In the short term, if spot gold prices close below $3,528.5 on the hourly chart, it will be regarded as a signal of a downturn, and $3,500 will be the first important support level. 

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

MTF Special Analyst Zheng Guangfu