Spot gold retreated from its intraday high near $3,660/oz during the Asian and European trading sessions on Friday (September 19), before resuming its modest gains in the European session. The safe-haven precious metal found some support amidst geopolitical tensions, including the escalating conflict between Russia and Ukraine and intensified conflict in the Middle East. However, the strengthening US dollar acted as a headwind for the commodity, limiting gold's upward potential and making it difficult to effectively break through the $3,660 mark.



Supported by hawkish comments from Federal Reserve Chairman Powell on Wednesday, the US dollar is attempting to extend its post-FOMC meeting rebound from its lowest point in February 2022 (96.21). This, coupled with generally positive market risk appetite, is suppressing gold prices. This suggests that investors should remain cautious before confirming whether gold's recent pullback from its all-time high of over $3,700 has concluded.

The dollar holds onto its rebound gains, while gold bulls show hesitation

U.S. President Donald Trump said on Thursday that Russian President Vladimir Putin had let him down and insisted that U.S. allies must stop buying Russian oil to end the conflict between Russia and Ukraine. European Commission President Ursula von der Leyen said the European Union would propose an accelerated phase-out of Russian fossil fuel imports.

Israeli forces launched multiple strikes on densely populated towns in southern Lebanon, targeting Hezbollah's military infrastructure. A military spokesman said the strikes were in response to Hezbollah's attempts to reestablish its presence in the region. Continued geopolitical risks provided support for safe-haven gold during the Asian session.

The Federal Reserve cut interest rates on Wednesday, as expected, for the first time since December 2024, and hinted at further rate cuts this year amid a weak labor market. However, Chairman Powell emphasized that inflation risks are tilted to the upside and said there is no need to rush to adjust interest rates.

In addition, data on Thursday showed that the number of initial U.S. jobless claims fell sharply from a nearly four-year high to a seasonally adjusted 231,000 in the week ending September 13. The Philadelphia Fed's manufacturing index jumped unexpectedly in September, rising from 1.7 to 23.2, the highest level since January.

These factors have contributed to the strong rebound of the US dollar and have curbed the large-scale bets of spot gold bulls. Therefore, before confirming whether the pullback of gold prices from the historical high (3707.35) this week has ended, we need to wait for strong follow-up buying signals before positioning to resume the established upward trend.

Gold technical patterns suggest caution

Gold prices fell below the 200-hour simple moving average (SMA, 3652.93) on Thursday for the first time since August 22, a move that favors spot gold bears. However, the subsequent decline stalled near the breakout point of the bullish flag pattern (US$3628 area), suggesting caution before planning a significant decline.

If gold prices break through the $3,660 resistance level, they may encounter resistance in the $3,673-3,675 range. After breaking through this resistance area, they may re-test the $3,700 mark. If they can continue to break through the historical peak of $3,707, the resistance level may rise to $3,750 or even $3,800.

On the downside, the resistance-turned-support level of $3,627.88 (the weekly low) could act as immediate support before $3,600. A break below this level could drag gold prices down to the $3,563-3,562 support zone, and then to the $3,511-3,510 area, which is expected to provide strong support for spot gold.



(Spot gold hourly chart, source: Yihuitong)

At 16:06 Beijing time, spot gold was trading at $3653.59 per ounce.