Will gold prices rise in a one-sided manner?
I. Fundamental Analysis
The gold market is currently in a delicate balance, caught between two major forces: monetary policy expectations and a strong US dollar.
Core Driver: Rising Fed Rate Cut Expectations
Main Logic: Recent dovish signals from several Fed officials (such as Waller and Williams), pointing to significantly lower core inflation and signs of weakness in the labor market, have openly supported a rate cut in December. This caused market bets for a December cut to surge from 40% to 72%.
Market Impact: Rate cut expectations lower US Treasury real yields and weaken the dollar's appeal, providing the most crucial upward momentum for non-yielding gold. This is the core factor currently supporting prices.
Primary Pressure: Strong US Dollar
The US Dollar Index hovering near six-month highs makes dollar-priced gold more expensive for holders of other currencies, capping the upside for gold.
Uncertainty Factors:
Key Data Pending: US Retail Sales, PPI, and Initial Jobless Claims data due this week will be key to validating the Fed's potential rate cut logic. Any strong data could weaken rate cut expectations and weigh on gold.
Geopolitical Risks: Persistent conflicts in Ukraine and the Middle East provide safe-haven demand. Continued inflows into Gold ETFs offer underlying support, limiting significant downside.
Fundamental Summary: The market is weighing "upward momentum from rate cut expectations" against "pressure from a strong dollar and data uncertainty," leading to a lack of clear directional momentum in the short term and resulting in consolidation.
II. Technical Analysis
The technical picture clearly shows the current consolidation phase and provides key entry and risk management levels.
Daily Chart: Symmetrical Triangle Consolidation
Pattern: Lower highs and higher lows are forming a symmetrical triangle pattern, indicating a balance between bulls and bears and brewing a potential breakout.
Key Levels:
Core Support: $4030 (triangle lower trendline support).
Core Resistance: $4130-$4135 (triangle upper trendline and previous high resistance).
Indicator: The MACD shows a bearish crossover but with weakening momentum, indicating lackluster selling pressure and a market awaiting a new direction.
4-Hour / 1-Hour Charts: Range-Bound
Main Range: Price action is confined within a broad $4020 - $4130 range.
Short-Term Structure: The convergence and flattening of short-term moving averages and the MACD lines indicate a temporary market equilibrium, waiting for an external catalyst to break.
Technical Summary: Gold is consolidating within the $4020-$4130 range. Until this range is decisively broken, buying near support and selling near resistance is the primary strategy.
Comprehensive Trading Strategy
Core Idea: Range-bound trading, selling highs and buying lows. Look for long opportunities near the range support and short opportunities near the range resistance.
Key Resistance Zone: $4110 - $4130
Key Support Zone: $4020 - $4040
Specific Operational Plan:
Short Strategy (Sell on rally to resistance)
Ideal Entry Zone: $4120 - $4130
Stop Loss: Above $4140 (a decisive break above the range high)
Targets: First target $4070-$4060, second target $4050.
Long Strategy (Buy on dip to support)
Ideal Entry Zone: $4040 - $4050
Stop Loss: Below $4020 (a decisive break below the range low)
Targets: First target $4080-$4090, second target $4100.
Breakout Follow-up Strategy (Contingency Plan)
Upside Break Confirmation: If the price breaks and sustains above $4140, it signals a potential upward move. Consider following the breakout with long positions, targeting $4180-$4200.
Downside Break Confirmation: If the price decisively breaks below $4020, it indicates increased downside risk. Consider following the breakout with short positions, targeting $3980-$3950.
Risk Warnings and Trading Discipline
Monitor Data and Events: Closely watch the release of US economic data this week and any unexpected comments from Fed officials, as they can instantly shift market expectations and cause sharp volatility.
Strict Risk Management: Always use stop-losses and control the percentage of capital risked per trade. Avoid holding losing positions hoping for a reversal, especially in ranging markets.
Remain Flexible: If the price action shows hesitation or false breakouts near key levels, exit positions and wait for clearer signals.
