Skip to main content

Gold Potential Breakout towards US$3,750 Zone

 



Potential Gold Breakout: Macro Catalysts Align with Technicals

Gold futures are showing signs of breaking out from a months-long consolidation, with recent macroeconomic developments strengthening the bullish case.


Market Context:
Last Friday’s weaker-than-expected US jobs report reignited expectations of a Federal Reserve rate cut as soon as September. The soft payroll data, combined with downward revisions and a tick higher in the unemployment rate, led to a broad sell-off in the US dollar and a sharp drop in Treasury yields—particularly the 2-year, which is highly sensitive to Fed policy.

According to CME FedWatch, markets are now pricing in an 81% chance of a rate cut in September, up from just 38% a day earlier. The narrative has shifted swiftly from “higher for longer” to “cut sooner than expected.” This environment historically benefits gold, which thrives amid lower yields and a weaker dollar.


Technical Setup:
Gold futures (COMEX) are currently trading at $3,399.8, testing the upper boundary of a symmetrical triangle pattern that has formed since April. This consolidation follows a sharp rally from the March lows, and the pattern now appears ripe for resolution.

Initial breakout zone: $3,420
1.618 Fibonacci extension: $3,746.8
2.618 Fibonacci extension: $4,131.1
Volume (FFI): Building momentum
Stochastics: Bullish crossover from oversold territory

The structure suggests strong accumulation, with buyers defending higher lows across the past three months. A confirmed breakout above $3,420 would likely trigger trend-following interest and algorithmic flows.

Strategy & Implications:
Traders should monitor for a decisive daily close above the $3,420 resistance line. This would mark a potential entry point for short-term momentum trades with upside targets at the Fibonacci levels highlighted above. Tight stops can be placed below $3,300 to manage risk within the structure.

Long-term investors may use any breakout confirmation to gradually build or add to strategic gold exposure. With real yields likely to fall further amid policy easing expectations, gold’s risk-reward profile is becoming increasingly attractive—especially as a portfolio hedge against macro volatility.


Bottom Line:
The confluence of a bullish technical setup and dovish macro backdrop sets the stage for a potential breakout in gold. The next few sessions could be critical in confirming directional momentum. A break above $3,420 would shift sentiment decisively in favor of the bulls.


Disclaimers Apply

Most Popular

Palantir Technologies Inc PLTR: Technical Rebound at Sight After US Broad Market Stabilises

  Palantir Technologies Inc. (PLTR) USD86.24 Palantir (PLTR) posted a bullish reversal, closing above the 13-day SMA (83.56) with significant volume expansion. This signals potential momentum strength in the near term. First key resistance zone between the 50% and 61.8% Fibonacci retracement levels (USD 99.85 – 105.79), which could present selling pressure. Disclaimers apply
Read more

DBS Group Holdings (D05) and Straits Times Index (STI): Technical Change of Momentum

         DBS Group Holdings (D05) and Straits Times Index (STI):  Technical  Change of Momentum  Recent price developments in DBS Group Holdings (SGX: D05) and the Straits Times Index (STI) signal a critical inflection point. Both instruments have breached established ascending trendlines, suggesting a potential reassessment in investor sentiment and market trajectory.  DBS Group Holdings (D05) Price Dynamics:  DBS has decisively broken below its ascending trendline, closing at SGD 44.23, registering a 3.53% decline. The price action underscores weakening upward momentum and raises the probability of an extended correction phase. Key Technical Levels: 38.2% Fibonacci retracement: SGD 41.45 50% Fibonacci retracement: SGD 39.78 61.8% Fibonacci retracement: SGD 38.12 Full retracement: SGD 32.72 Outlook:  The breach beneath the trendline suggests an erosion of bullish conviction. Immediate attention should be on the 38.2% retracement le...
Read more

Week Ahead: US Indices Momemtum in Question

    Week Ahead: 10 March 2025 Key event this week was  U.S. indices technically closed below the key 30-week (or 150-day) moving average . For the upward trend to continue, the indices need to reclaim levels above the moving averages. Remaining below the 30-week (or 150-day) moving average could indicate that the upward trend has reversed downward. However, in the short term, we expect a rebound as the indices trade near their respective support levels. Medium Term: S&P 500 (SPX):  The S&P 500 broke below its key upward trendline, which had been established since October 2023. In the longer term, we expect the index to trade sideways or move in a downward direction. In the short term, we anticipate the S&P 500 will find support at the 5,700 level and could rebound to test the 5,860 and then the 5,966 resistance zones. Straits Times Index (STI):  The technical trend remains bullish. We maintain a constructive outlook while staying vigilant for any sig...
Read more