(Kitco News) – Technicals, fundamentals, and data all came together this week to propel gold to one of the strongest weekly performances of its remarkable multi-year rally, as the yellow metal blew through key resistance levels on its way to a fresh all-time high.
Spot gold kicked off the week trading at $3,446.61 per ounce, and after a brief dip down to test $3,440, it was off to the races, with the yellow metal quickly reaching $3,483 just before 11:00 p.m. EDT, and $3,488 per ounce at the start of European trading on Monday morning.
The thin Labor Day volumes couldn’t sustain the momentum, however, and gold slid back to test $3,470 as the day wore on, but the start of the Asian session on Monday evening saw gold quickly break above the $3,500 resistance level, topping out just shy of $3,503 before pulling back into the mid $3,470s.
The fuse had been lit, however, and when North American traders returned on Tuesday morning, they drove gold all the way to $3,526 per ounce by noon, and $3,539 per ounce before the market close. Asia then maintained a narrow $10 range overnight, before European traders once again set gold on an upward trajectory, which continued unabated through the North American session on Wednesday, and which saw spot gold top out at a fresh all-time high just below $3,580 per ounce.
After a marginal pullback into the North American close on Wednesday, the table was now set for a meaningful retest during the Asian session, as spot gold dipped back to $3,515 per ounce by 11:00 p.m. Eastern before a quick bounce back up to $3,530 set the yellow metal on the week’s only protracted period of consolidation through Thursday as traders looked to Friday morning’s non-farm payrolls report – the weeks last major catalyst.
The jobs report delivered, significantly missing expectations and catapulting gold from $3,550 per ounce in the minutes before the 8:30 a.m. release to yet another all-time high of $3,583 immediately afterwards. From there, it was only a matter of time before spot gold broke through the $3,600 per ounce level shortly after noon Eastern.
Even at these unprecedented levels, gold prices barely dipped, trading above $3,590 per ounce into the week’s close.
The latest Kitco News Weekly Gold Survey showed Wall Street sentiment overwhelmingly bullish after the week’s series of all-time highs, while Main Street investors added to their bullish majority opinion on gold’s performance next week.
“I am bullish on Gold for the coming week,” said Colin Cieszynski, chief market strategist at SIA Wealth Management. “Disappointing US employment numbers this week have increased pressure on the Fed to cut interest rates at its upcoming meeting, perhaps by 50 bps. This has started to drive down treasury yields and the US Dollar, opening the door for Gold to potentially keep climbing.”
“Lower… but not significantly so,” said Rich Checkan, president and COO of Asset Strategies International. “I expect a slight dip on profit-taking and as a result of some trepidation leading up to the FOMC rate decision on the 17th.”
“Up,” said Darin Newsom, senior market analyst at Barchart.com. “Because it would be foolish to think otherwise, given the various aspects of the market continue to make new all-time highs.”
“Gold has clearly broken out on ongoing central bank buying as well as new buying based on easier monetary policy in the U.S. and around the world,” said Adrian Day, president of Adrian Day Asset Management. “The Federal Reserve’s expected interest rate cut this month is already priced in, and yet the market may well see this as a change in direction. Although a pullback and retracement to recent range ($3,400 level perhaps) cannot be ruled out if Federal Reserve Chairman Jerome Powell sounds hawkish in his comments accompanying the rate cut, or if consumer price numbers come in very strong, after the dust settles, gold will be higher.”
“Next week? Who knows?” Day said. “A month and two from now: higher. I guess put me down as UP.”
Lukman Otunuga, manager of market analysis at FXTM, is neutral on gold in the near term, but warned that the market is dangerously overbought.
“Up,” said James Stanley, senior market strategist at Forex.com. “I think there’s little point in questioning the trend at this stage. I’ve been bullish for the past couple of years, and I’m still in the same spot even with gold setting another fresh ATH this week.”
“With FOMC coming up, I think the market’s expectation for a hard dovish push from the Fed can continue to propel gold prices, and I’m expecting pullbacks to be shallow unless something changes there,” Stanley added.
Michael Brown, senior research strategist at Pepperstone, is slightly bearish for next week. He noted that gold has come a long way in a short period of time, and he sees the risk of a pullback, but added that dips should be seen as buying opportunities.
Paul Wong, market strategist at Sprott Asset Management, was unpacking the implications of gold’s sharp move higher on Friday.
“The immediate driver of this week's breakout was supposedly that macro funds were buying gold, and they were selling long bonds on the back of that,” he told Kitco News. “That's what broke gold above that $3,500 level. Since about April, gold's been consolidating inside this four-month-long bullish consolidation pattern – never really sold off, no signs of any central bank selling – it was just mostly investment funds not buying, but definitely not selling.”
Wong said this long, protracted flat period is technically a very bullish pattern.
“Typically, you had such a good run in something like this, and it doesn't sell off, can't sell off, won't sell off, it's a sign of underlying strength and accumulation,” he said. “So that type of bullish pattern, when it breaks higher, tends to gap up, and this is the gap up.”
“The target on the chart is about $3,900,” he added. “That's the immediate projection from that bullish breakout we're seeing right now.”
The fundamental picture in the U.S. is also very supportive, Wong said, as above-target inflation and a weakening labor market – combined with soaring debt and mounting political pressure on the Federal Reserve – make dollar debasement the only viable path forward. “You can actually put all that as part of a Venn diagram,” he said.
The other major component supporting this gold rally is trust, or lack thereof. “It's loss of trust in the entire financial [system], loss of trust in central banking, loss of trust in institutions, loss of trust in government,” Wong said. “When you lose trust in the value of monetary assets, you will go to gold. It's a non-financial asset. It is non-governmental. It is becoming the safe haven: It's not just a safe haven, it’s a safe asset.”
“The fundamentals are basically saying there is a lack of trust that's breaking across governments, institutions, central banks, et cetera,” he said. “If you are a multi-strategy asset manager, and you say, ‘Okay, what asset do I have that's a safe haven?’ It's gold.
“Let's lower the bar,” Wong added. “‘What's safe?’ Still gold.”
This week, 18 analysts participated in the Kitco News Gold Survey, with Wall Street’s bulls cementing their control after this week’s breakout performance. 14 experts, or 78%, expect to see gold prices rise during the week ahead, while only three, or 17%, predicted a price decline. The remaining analyst, representing 5% of the total, saw the yellow metal trading sideways next week.
Meanwhile, 219 votes were cast in Kitco’s online poll, with Main Street investors becoming more bullish after gold’s sharp rise. 160 retail traders, or 73%, looked for gold prices to rise next week, while another 33, or 15%, expected the yellow metal to lose ground. The remaining 26 investors, representing 12% of the total, predicted price consolidation during the week ahead.
Next week will be thin on economic data, though the handful of releases and announcements that are on the docket are significant ones as inflation returns to the fore.
On Wednesday, markets will receive the U.S. Producer Price Index for August, with both the headline and core numbers expected to pull back significantly from the July print.
Then on Thursday, traders will tune into the European Central Bank’s monetary policy meeting – with markets priced in for a hold at 2.15%v – followed by the U.S. Consumer Price Index for August. Markets will also watch weekly jobless claims for further evidence of U.S. labor market weakness.
The week’s releases wrap up on Friday morning with the Preliminary University of Michigan Consumer Sentiment survey, which has also been very inflation-focused this year.
“Gold reached record highs after the weak US jobs report, the dollar drop, and the decline in US rates,” said Marc Chandler, managing director at Bannockburn Global Forex. “I would be cautious as $3600 is approached. Pendulum of market sentiment has swung as far as it may in favor of Fed cuts as next week’s CPI is likely to tick up.”
“US reverse repo use is falling, and this may inject volatility into the US bond market,” Chandler warned. “Gold in the spot market is above the upper Bollinger Band (~$3474).”
Sameer Samana, head of Global Equities and Real Assets at Wells Fargo Investment Institute, told Kitco News that gold and silver should outperform even a hot equity market in a lower-rate environment.
“I think what's really interesting is just how good the environment is for all risk assets, across the board,” Samana said. “Rarely have you had a Fed start to actively consider cutting rates when inflation has been this far above their target of 2% – running at 3% and bottoming out – and they're talking about cutting rates.”
“Clearly their focus is shifting from inflation to the labor market,” he added. “For high-quality risk assets, I think it means game on.”
This renewed investor appetite is being reflected in the equity markets – and also in metals prices. “It's becoming harder and harder to make a bear case for really anything other than bonds, given this pivot by the Fed,” he said.
Samana said the case for gold is structural.
“If the Fed's going to start cutting interest rates and focus on the labor market with inflation at 3%, they're basically throwing bondholders under the bus,” he said. “Bonds are going to be under pressure, and they're not going to be the typical diversifiers, because they struggle to be good diversifiers in a high-inflation environment. Then people need to look elsewhere for diversification, and gold seems to be the easiest alternative, because it does well in uncertain times. For individuals, I think it's a diversification aspect that historically tended to be more tied to bonds.”
“Then on the central bank side, on the institutional side, there's the ‘diversification away from the dollar’ aspect,” Samana said. “Central bankers around the world are rethinking how much money they want tied up in U.S. dollar assets.”
“If all these countries are going to be thinking about their economies first and fiscal discipline second, it's probably going to be very inflationary,” he added.
Silver is set to be another major beneficiary of the low-rate, risk-on environment, but Samana cautioned that silver could still weaken in the near term as economic activity slows.
“But over the next 12 months, I could see silver outperforming by a little bit,” he said. “If gold, let's say, is up mid-single-digits, it wouldn’t surprise me if silver's coming in close to high-single-digits.”
Eugenia Mykuliak, founder and executive director of B2PRIME Group, told Kitco News that a weakening dollar, expectations for a U.S. rate cut this month, and growing doubts about the Fed’s independence were what pushed gold prices to record highs.
“Central banks also play a big role,” she noted. “Countries like China, Turkey, and India continue building reserves, while ETFs have steady inflows. This clearly creates a strong demand that isn’t tied to short-term speculation.”
On the investment side, Mykuliak said there are only more questions about the safety of the usual safe havens. “U.S. Treasuries and the dollar carry more risks than before, so gold has now become a fallback option,” she said. “Technical momentum also supports the move, and I expect the price to head toward $3,600-$3,800 as the next target range, with $4,000 as a realistic peak.”
Alex Kuptsikevich, senior market analyst at FxPro, expects gold prices to rise higher next week.
“Mass sell-offs in the global bond market have boosted demand for safe-haven assets and pushed gold to record highs,” he noted. “Governments actively increased borrowing during periods of ultra-low interest rates, but these rates rose significantly between 2022 and 2024. As a result, the US is paying four times more to service its national debt than it did before the global financial crisis, and more than it spends on defence.”
“High demand for precious metals is supported by ETF buyers and central banks' intention to increase their bullion purchases after a slowdown in the second quarter,” Kuptsikevich added. “The reserves of the largest specialised fund, SPDR Gold Share, have reached their highest level since August 2022. Expectations of a Fed rate cut are creating a tailwind for gold, with Morgan Stanley forecasting that the rate will be cut to 2.75-3% in 2026.”
“UP,” said Michael Moor, founder of Moor Analytics. “In a Higher time frame: I cautioned on 8/16/18 the break above $1,179.7-$1,183 warned of renewed strength. We have seen $2,456.4. This is OFF HOLD. On a Medium time frame: The break above 31482 warned of strength for days—we rallied $491.9. The trade above 32214 projects this upward $100 (+)—we rallied $418.7. The above are OFF HOLD.”
“On a Lower time frame: The trade above 33411 (-9 tics per/hour) has brought in $299.0 of strength,” Moor continued. “The trade above 33850 (+4 tics per/hour) has brought in $255.1 of strength. The trade above 34186 (-.6 of a tic per/hour) has brought in $221.5 of strength. The break back above 35640 (+.8 of a tic per/hour) has brought in $76.1 of strength.”
And Kitco senior analyst Jim Wyckoff expects gold to keep building on its recent breakout. “Higher as fundamentals, technicals firmly bullish.”
At the time of writing, spot gold last traded at $3,590.11 per ounce for a gain of 1.25% on the day and 5.07% on the week.
