Go long on gold, but be wary of potential declines.Go long on gold, but be wary of potential declines.
Spot gold prices have hit consecutive record highs in the past hour. This strong rally is primarily driven by the following factors:
1: The market currently prices a 91.9% probability of another Fed rate cut in October. This expectation will depress the US dollar and real yields, thereby increasing gold's appeal.
2: Friday's release of US core PCE inflation data will be a key factor. If the data shows slowing inflation, it will further reinforce expectations of rate cuts, which will benefit gold.
Key Support: Safe-Haven Demand: Ongoing geopolitical risks and global economic uncertainty are driving investors to allocate gold as a safe-haven asset.
Currency Market Signals: Gold's rise is primarily driven by demand from central banks and Asia, while Western investors are also increasing their gold holdings through channels such as gold ETFs.
Simply put, the current gold market presents a situation where "long-term logic is sound" and "short-term technical overbought" coexist.
Key Strategy: Follow the trend, but be wary of pullbacks.
The current market trend is bullish, so the strategy should primarily focus on buying dips, avoiding blindly speculating on tops and shorting. However, we must also be prepared for possible technical pullbacks.
Buy on Dips (Primary Strategy)
This strategy is suitable for entering the market when gold prices moderately retreat from their highs and find support before rising again.
Timing of Entry:
Best entry: When prices retreat to the $3705-3710 area (strong support during the Asian and European trading sessions) and a bullish candlestick pattern (such as a hammer or bullish engulfing candlestick pattern) appears on the 5-minute or 15-minute chart.
Second option: Enter after a strong breakout above the previous intraday high (such as $3726), and a minor pullback confirms this move.
A more conservative option: Enter if prices experience a deep pullback to the more critical support level of $3685-3695 (the resistance-turned-support level broken yesterday), then stabilize and rebound.
Stop-loss Setting:
Set your stop-loss $5-8 below your entry price. For example, if you go long at $3710, set your stop-loss at $3702.
The absolute bottom line: Stop-loss should not be set below $3673 (the bull-bear watershed). If it falls below, the short-term trend may weaken.
Target Price Levels:
First target: $3730-3735 (a new all-time high to attract buying).
Second target: $3740-3750 (a psychological round number).
Use a trailing stop: As the price moves in your favor, gradually raise your stop-loss to protect your profits.
Data Risk: Friday's US core PCE price index is the biggest variable.
