Gold market analysis

"Gold Price at $3,675 Marks the Bull-Bear Divide" 16/9/2025 9:59 Finalized 

Gold prices hit a new high. Spot gold prices plunged sharply at the beginning of the Asian session and then rebounded rapidly, which made me feel something was amiss. Spot gold prices dropped to a low of $3,626.65 in the early stage and then rose rapidly. Before the opening of the New York market, it consolidated in a narrowing triangle pattern. After the opening of the New York market, it broke through the downward trend line of the triangle in the hourly chart in a piercing pattern, reaching a high of $3,651. It then rose sharply for three consecutive hours, reaching a new historical high of $3,685. 

Foreign banks expect a 50 basis point interest rate cut. 

Gold prices hit a new high again before the Federal Reserve's interest rate meeting. The reason for this might be related to the expectations of major foreign banks regarding the extent of the rate cut this time. Societe Generale and Standard Chartered Bank expect the Federal Reserve to cut interest rates by 50 basis points at this meeting, but the market generally expects only a 25 basis point cut. Societe Generale believes that the Fed's moderately restrictive stance has exceeded its appropriate scope and has been overly restrictive, thus requiring a strong adjustment. Even though there are still concerns about more stubborn inflation, the risk balance is tilting towards the employment aspect of the Fed's dual mandate. 

If the Federal Reserve really cuts interest rates by 50 basis points, the US dollar exchange rate will surely fall sharply as it is beyond market expectations. The possibility of gold prices reaching a new high still depends on the current level of gold prices. If it is around $3,660, the possibility of a sharp increase of more than $20 is very high regardless of the extent of the rate cut. However, if it is above $3,680, the situation is different. If the rate is cut by 25 basis points, gold prices are likely to drop by $20 to $3,660 directly, or reach a new high first and then fall, causing a "double whammy". If gold prices are above $3,680 and the Federal Reserve cuts interest rates by 50 basis points, it may indicate that some market participants have already roughly known that the rate would be cut by 50 basis points. In this case, the possibility of gold prices breaking through $3,700 is relatively large. 

The short-term range is expected to be between $3,660 and $3,690. 

If the Federal Reserve only cuts interest rates by 25 basis points at this meeting but the latest economic forecast implies that further rate cuts are likely in the future, especially with upward revisions to the unemployment rate and downward revisions to the inflation rate and economic growth rate, the chances of rate cuts in October and December will increase. The performance of gold prices will be more volatile and will rise and fall with the quality of economic data, with employment data having a relatively greater impact. 

Gold prices hit a new high in the early Asian session this morning, with spot gold rising to the $3,689 level. However, a bearish engulfing candle was left on the 5-minute chart, and the price then dropped further to $3,677 before stabilizing slightly. Before closing below $3,676 on the hourly chart, there were no strong technical signals indicating a reversal. Measured by the Fibonacci extension from the September 11th movement, the accumulated gains since yesterday have reached 1.382 times the extension (3,685), which is a technical resistance level. In the short term, $3,675 is a key support level for gold. If it holds above this level, the trend will be strong; if it falls below $3,675, the trend will be weak. In a broader range, gold is expected to fluctuate between $3,660 and $3,690. 

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

MTF Special Analyst Zheng Guangfu