(Kitco News) - The gold market is seeing solid selling pressure as $3,900 caps the rally for the second consecutive day; however, one market analyst says that even if there is some consolidation, the precious metal still has plenty of bullish momentum for the final quarter of 2025.
In a four-quarter preview, Fawad Razaqzada, Market Analyst at City Index and FOREX.com, said that gold could still reach $4,000 an ounce by the end of the year; however, it won’t come without risks.
With gold prices up more than 40% so far this year and on track to see their best annual gains since 1979, Razaqzada said gold’s bullish momentum cannot be ignored. But he also added that gold is extremely overbought.
“Overbought signals are flashing, yet the price action itself remains resolutely bullish. Without clear signs of reversal on the charts, it’s fair to treat these indicators as confirmation of what we already know: the trend has been very strong indeed,” Razaqzada said in his note.
Looking at technical levels, Razaqzada said that key support can be found at $3,500 an ounce, with minor support at $3,700 and $3,600 an ounce.
“Below these levels, $3,435 is another interesting one to watch, marking the base of the Q3 breakout. A slip under that zone would make things more interesting, with the key line in the sand down at $3,300 – the last major swing low before the latest bull leg took off,” he said. “Until we see a definitive reversal pattern, the playbook hasn’t changed despite extremely overbought technical levels. Dips continue to be bought in what remains a very strong and healthy bull market.”
Although the gold market is starting to see some downside risks, Razaqzada said the uptrend remains well supported by robust fundamentals. He explained that the rally hasn’t been driven by speculative interest.
“A weaker dollar, strong central bank buying, and dovish monetary policy have created a near-perfect environment for gold to thrive,” he said.
Specifically, Razaqzada noted that gold continues to benefit from ongoing weakness in the U.S. dollar, which is seeing its worst performance in more than two decades.
By the end of September, the Dollar Index (DXY) was down around 10%. If it finishes the year near these levels, it would mark its weakest performance against major peers since 2003, when the DXY slipped nearly 15%. Much of this year’s weakness is linked to tariff-induced fears of stagflation and a broader sense that America’s economic dominance is being challenged. “The trend of de-dollarisation, whereby foreign investors diversify away from U.S. assets, has also gathered pace,” he said.
At the same time, the Federal Reserve’s renewed easing cycle is expected to put more pressure on the U.S. dollar and provide a tailwind for gold.
Markets are currently pricing in at least one more rate cut before the end of the year. However, some economists have said that the longer the government shutdown lasts, the greater the chance of more aggressive easing.
