Gold market analysis

"Gold Price Rises Sharply; Beware of Short-Term Peak" 1/9/2025 10:16 Completed 

Last Wednesday, I expected that gold would encounter resistance only when it rose to $3,450. On Friday, I pointed out the significance of $3,400 and that friends would defend this level. As a result, gold only dropped to the $3,404 level in the early Asian session on Friday, and rose as high as $3,454. The closing price was only back at $3,448. There is no doubt that gold broke the two-day reversal curse after rising above $3,400 on Friday and showed a clear technical breakthrough. 

Based on the highest closing price on the daily chart, gold prices broke through the resistance of the flat-topped ascending triangle formed since early April this year at $3,432.6 on Friday. Moreover, gold prices have long broken through the TD descending track on the daily chart. The measured target remains the previously mentioned $3,536. However, in terms of short-term trends, using the Fibonacci extension line to measure the movement since July 30, the highest price of gold on Friday has exceeded the 100% extension increase of $3,452.14. Therefore, it can be judged that gold prices will undergo a short-term adjustment. 

US employment data fails to dampen expectations of interest rate cuts 

Due to the significant technical breakthrough in gold prices last Friday and the Federal Reserve's inclination to cut interest rates again this month, gold prices are unlikely to experience a sharp decline. Moreover, the US markets are closed today for Labor Day, resulting in even lower volatility. It is worth noting that the US will release the August ADP private employment report this week, with market expectations of an increase of 71,000 jobs. The US Department of Labor will also release the August non-farm payroll report this Friday, with market expectations of an increase of 74,000 non-farm jobs and a slight rise of 0.1 percentage point in the unemployment rate to 4.3%. Such data would undoubtedly be favorable for gold prices. However, some market voices have pointed out that the focus of the latest non-farm payroll report lies in the revision values, and the data may cause market fluctuations, but it is believed that it will not change the probability of the Federal Reserve cutting interest rates this month. 

As for the gold market, the SPDR Gold ETF holdings increased by 9.74 tons to 977.68 tons last Friday, meaning that it has been continuously increasing for five consecutive trading days last week. In total, it increased by 20.91 tons for the entire week. Due to the US market being closed today, the gold price may experience significant fluctuations. This morning, the gold price hit a low of $3,437 in the early Tokyo market and then continued to rise, breaking through the high point of last Friday and reaching a high of $3,471. It then slightly retreated to $3,455. 

$3,450 is the first key support level. 

It seems that Asian investors are aiming to take the lead in the market while the US is closed and Europe has not yet opened. They may even directly challenge the $3,500 mark, leaving European friends with no good entry point. Therefore, it is important to note that if the gold price remains at its intraday high in the early part of the Tokyo midday session, it is very likely to fall sharply after Europe opens, especially since today is a potential short-term cycle top for the gold price. The higher the price closes today, the greater the probability of an adjustment wave starting tomorrow. Conversely, if the gold price has already given back most of its gains from the Asian session before Europe opens, it is expected to fluctuate within the range of $3,437 to $3,471 for the day. $3,450 is the first important support level, with $3,437 being the second. $3,400 is believed to be a strong support level before the Fed's interest rate announcement. 

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

MTF Special Analyst Zheng Guangfu