Fundamental Overview
Gold prices have eased from their record high of $3,897 per ounce, but dovish expectations surrounding the Federal Reserve continue to underpin dip-buying momentum, keeping sentiment broadly positive for the non-yielding metal.
Despite persistent U.S. government shutdown risks, the resulting data blackout, and escalating geopolitical tensions between Russia and NATO, gold’s safe-haven appeal remains strong. The German Federal Police confirmed to Bild that Munich Airport was closed following a drone sighting — one of several recent incursions that have prompted EU leaders to convene an emergency drone security summit in Copenhagen.
Adding to regional instability, 20 Russian drones reportedly entered Polish airspace, while Russian MiG-31 fighter jets briefly crossed into Estonian territory. In response, the G7 reaffirmed its commitment to tighten sanctions against Moscow, pledging to phase out remaining imports and warning against any entity aiding Russia’s war efforts.
Looking ahead, if traders downplay the short-term risks of the U.S. shutdown widely expected to last less than a week risk appetite could improve, fuelling modest corrections in gold. Meanwhile, ISM Services PMI data and a series of Fed speeches later in the week may help clarify the next phase of monetary easing, shaping market sentiment as the weekend approaches.
Recent comments from Dallas Fed President Lorie Logan and Chicago Fed’s Austan Goolsbee acted as short-term headwinds. Both emphasized that “extreme caution” is needed before cutting rates, warning against premature or excessive easing. Their remarks tempered expectations for 2025 rate cuts, driving a brief U.S. dollar rebound and weighing on gold in the near term.
Technical Analysis
On the 4-hour chart, Bollinger Bands are narrowing, and short-term moving averages have begun to flatten signalling reduced volatility and range-bound consolidation. Prices continue to oscillate above the EMA12 and the middle Bollinger Band, suggesting near-term support remains intact.
The MACD recently formed a bearish crossover, with both lines retreating toward the zero axis, implying that the ongoing correction may not yet be complete. Meanwhile, the RSI stands near 54, reflecting a neutral stance as traders await confirmation. As long as gold holds above EMA12, a retest of $3,900 — and potentially $4,000 — remains on the table.
On the daily timeframe, price action has printed fresh record highs, but the RSI has failed to confirm new peaks, producing a bearish divergence. With RSI now at 78, gold is technically overbought, hinting at the likelihood of a short-term pullback. Even so, the broader uptrend remains intact, and buying near key supports continues to offer favourable risk-reward.
Trading Plan
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Trading Direction: Buy
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Entry Price: 3859
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Target Price: 4100
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Stop Loss: 3750
Support Levels: 3800, 3765, 3550
Resistance Levels: 3900, 3950, 4100
Outlook: While gold remains technically overbought, its strong macro backdrop — driven by dovish Fed expectations and persistent geopolitical risk continues to favour buying on dips. Sustained support above $3,850 keeps the path toward $4,000 open.
