The continuous short positions in gold have ended perfectly!Whether gold can break through resistance levels in the near term depends on the convergence of three factors: First, whether the US dollar and US Treasury yields experience a more sustained decline, creating room for discounting; second, whether risk appetite strengthens the "insurance demand" for gold due to equity volatility and increased macroeconomic uncertainty; and third, whether net inflows of funds continue, especially whether passive funds and longer-term allocation funds enter the market simultaneously. If these three factors fail to move in tandem, the price will likely continue to consolidate within the $3930-$4000-$4050 range. If they move in unison, the resistance above these round numbers will weaken more smoothly. It's worth noting that the People's Bank of China suspended its 18-month gold purchase program in May 2024 but resumed it in November of the same year. The market currently expects a 67% probability of a Fed rate cut in December, up from around 60% the previous trading day. The Fed just cut rates last week, and Powell stated that this may be the last rate cut this year. The market's current focus is on macroeconomic data and when the US government shutdown will end—which is also driving safe-haven demand for gold. The congressional gridlock led to the longest government shutdown in U.S. history, forcing investors and the data-dependent Federal Reserve to rely on private economic indicators. Since gold does not generate interest income, it typically performs well in low-interest-rate environments and periods of economic uncertainty.
Gold Technical Analysis: With the non-farm payroll data still pending, gold prices are likely to fluctuate little tonight, mainly consolidating. The battle between bulls and bears continues throughout the day. During the US session, gold rebounded to around 4027. We had already positioned short positions at 4015 and 4025, which subsequently fell back as expected, resulting in a profitable trade. This week's trading session has concluded perfectly, and we will not participate in the late-session trading. Our strategy remains to short below 4030.
From a technical analysis perspective, key resistance and support levels need to be monitored. The upper resistance level to watch is the 4020-4030 area. If gold prices can break through this range and hold, the upward trend may continue in the short term, potentially challenging higher levels. Before this breakout, we have consistently emphasized against chasing highs and have provided a strategy and analysis for shorting in batches around the 4015-4030 area. Those who follow me should have seen this. Gold faces significant upward pressure, and unless there is a major positive news event to stimulate a breakout, we will continue to maintain a strategy of selling on rallies. Due to the lack of non-farm payroll data, gold prices will continue to be treated as oscillating. The lower support level is seen in the 3975-3960 area. If this support level is effectively broken, it may trigger a new round of declines, potentially opening up further downside potential.
