Last week, the gold market saw intense long-short volatility, with the price briefly surging to $4,450, a two-month high, before a profit-taking sell-off on Thursday triggered a sharp 1.3% decline. On Friday, the metal further retraced to a weekly low near $4,310. However, as bearish momentum appeared to take hold, weaker-than-expected U.S. retail sales data sparked a textbook V-shaped reversal, driving gold to close the week at $4,375, a net gain of approximately 0.8%. The weekly range of $140 and a bullish candlestick with a long lower shadow highlighted strong resilience from buyers, with the price ultimately recovering from the week's low.
This price action was driven by a combination of factors: signs of a slowing U.S. economy, rising expectations of a Federal Reserve rate cut, and escalating geopolitical risks in the Middle East. Market sentiment is increasingly bullish, but gold's future trajectory remains highly dependent on Fed policy expectations, making this week's release of the Federal Reserve's meeting minutes a pivotal event for market focus.
The new week began with gold extending its rebound, briefly breaking above the $4,400 mark. Since the inflation data was released, the price has exhibited a pattern of oscillating rallies and pullbacks. The latest U.S. retail sales data further confirms a slowdown in the U.S. economic momentum, reinforcing expectations of a policy shift from the Fed. A weaker dollar also provides additional support for gold, which is priced in the U.S. currency.
The market is now operating on a clear trading logic: U.S. inflation remains moderate, consumer data continues to weaken, expectations of further Fed rate hikes diminish, real yields and the dollar decline, and gold's value as a portfolio asset rises. However, it is important to note that the market has already priced in some of the expectations for a pause or reversal of rate hikes. For gold to break higher on a sustained basis, subsequent economic data must continue to validate this logic.
On a medium-term technical basis, gold's overall uptrend remains strong. The price has firmly held above the 10-day moving average of $4,300, and the larger structure is bullish. While the price spiked to a two-month high on the back of inflation data and then corrected quickly, this pullback did not damage the overall upward structure, indicating strong buying support at lower levels. The daily RSI is now in the bullish zone but not yet overbought, leaving room for the bulls to test higher resistance levels.
The immediate resistance level to watch is the weekly high of $4,450. A clean break above this level would open the door for a move toward $4,500 and beyond. If the price fails to hold above this level after repeated attempts, a sharp sell-off from profit-taking could lead to a correction. The near-term support level is $4,300, which is both a technical support from the moving average and a key short-term bull/bear boundary. A break below this level would target the $4,200 support, and if the medium-term trend turns decisively bearish, the key defense level would be $3,905.
On a shorter-term timeframe, gold is still in a recovery phase, consolidating around the $4,400 level as it recovers from the recent sharp pullback. The short-term momentum is bullish, but the price is approaching a previous heavy trading zone. For a sustained advance, it needs to be accompanied by a simultaneous weakening of the U.S. dollar and Treasury yields. If the price holds above $4,300 but fails to break above $4,450, the market is likely to remain in a range-bound pattern.
Therefore, for the early part of the week (Monday and Tuesday), a trading range of $4,310 to $4,450 is likely. Until a clear break occurs, the strategy should be a range-bound approach of buying dips and selling rallies. Once a decisive break above or below this range happens, the strategy should switch to following the trend. The overall larger cycle is clearly bullish, so the core strategy for the start of the week is to trade with a bias toward upward movement, waiting for a breakout. A contingency plan would be a deep correction after a failed breakout. In a clear bullish structure, a pullback to $4,310 or even $4,200 would represent a good opportunity to buy on dips.
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