Gold bulls hold strong control! Powell's dovish tone plus geopolitical risks, is 3900 within reach?
2025-09-24 14:21:10
Spot gold prices initially dipped before rising during the Asian and European trading sessions on Wednesday (September 24th), recovering from the modest decline to around $3,750 per ounce during the Asian session. The price appears to have halted its correction from the previous day's record high and is now fluctuating above $3,770. Market expectations of further interest rate cuts by the Federal Reserve, as well as geopolitical uncertainty stemming from the escalating conflict between Russia and Ukraine and intensified conflict in the Middle East, continue to support precious metals prices. Furthermore, a slight deterioration in global risk sentiment is also boosting prices for this safe-haven commodity.
Meanwhile, after Federal Reserve Chairman Powell expressed caution about potential rate cuts, the US dollar received active buying support, ending its two-day losing streak. Against the backdrop of gold's technical overbought condition, this may curb the market's new long positions in the non-interest-bearing asset, gold.
However, the positive fundamental environment suggests that the path of least resistance for gold prices remains to the upside, with market focus now shifting to Friday's release of the U.S. personal consumption expenditures (PCE) price index.
Market expectations that the Federal Reserve will cut interest rates again in October and December after slashing rates by 25 basis points last week helped attract bargain hunting for non-interest-bearing gold on Wednesday.
Federal Reserve Chairman Jerome Powell tried to downplay market expectations of further rate cuts in the coming months, saying on Tuesday the Fed would need to continue balancing the dual risks of high inflation and a weak job market in its subsequent rate decisions.
Powell added that overly aggressive easing could leave the fight against inflation unfinished and necessitate a shift, a resurgence in demand for the dollar and likely cap gains for precious metals.
NATO warned Russia on Tuesday that it would use all necessary military and non-military means to defend itself, following recent Russian provocations and airspace violations against NATO allies Estonia, Poland, and Romania. Meanwhile, Israel continues its military operations in the Gaza Strip. A recent UN report indicates that the Israeli government has demonstrated a clear intention to permanently control Gaza and maintain a Jewish majority in the West Bank.
These events have heightened concerns about the expansion of the Middle East conflict, causing geopolitical risks to continue to ferment and becoming another key factor supporting the prices of safe-haven commodities.
This week’s US economic agenda also includes the release of final second-quarter GDP and durable goods orders data on Thursday, followed by the key personal consumption expenditures (PCE) price index on Friday. These data will dominate gold prices and the US dollar in the short term.
Despite technically overbought conditions on the daily chart, gold's recent explosive upward momentum remains unimpeded. Dip-buying on Wednesday suggests that the path of least resistance for gold remains tilted to the upside. However, the overnight pullback in gold prices just before the $3,800 mark could be seen as the first sign of exhaustion among bullish momentum.
Therefore, on the downside, if gold prices fall below the Asian session low (around $3,750), subsequent selling pressure may fall to the $3,710-3,700 support zone. This support range constitutes a strong support for gold prices, and if it is effectively broken, it may trigger a deeper correction.
On the upside, spot gold bulls may need to wait for the gold price to effectively break through and stabilize at the $3,800 mark before they can confirm the continuation of the established upward trend of the past month and then test $3,900.
(Spot gold 4-hour chart, source: Yihuitong)
At 14:20 Beijing time, spot gold was trading at $3774.52 per ounce.
Meanwhile, after Federal Reserve Chairman Powell expressed caution about potential rate cuts, the US dollar received active buying support, ending its two-day losing streak. Against the backdrop of gold's technical overbought condition, this may curb the market's new long positions in the non-interest-bearing asset, gold.
However, the positive fundamental environment suggests that the path of least resistance for gold prices remains to the upside, with market focus now shifting to Friday's release of the U.S. personal consumption expenditures (PCE) price index.
Supported by favorable fundamentals, gold bulls are still in control of the situation
Market expectations that the Federal Reserve will cut interest rates again in October and December after slashing rates by 25 basis points last week helped attract bargain hunting for non-interest-bearing gold on Wednesday.
Federal Reserve Chairman Jerome Powell tried to downplay market expectations of further rate cuts in the coming months, saying on Tuesday the Fed would need to continue balancing the dual risks of high inflation and a weak job market in its subsequent rate decisions.
Powell added that overly aggressive easing could leave the fight against inflation unfinished and necessitate a shift, a resurgence in demand for the dollar and likely cap gains for precious metals.
NATO warned Russia on Tuesday that it would use all necessary military and non-military means to defend itself, following recent Russian provocations and airspace violations against NATO allies Estonia, Poland, and Romania. Meanwhile, Israel continues its military operations in the Gaza Strip. A recent UN report indicates that the Israeli government has demonstrated a clear intention to permanently control Gaza and maintain a Jewish majority in the West Bank.
These events have heightened concerns about the expansion of the Middle East conflict, causing geopolitical risks to continue to ferment and becoming another key factor supporting the prices of safe-haven commodities.
This week’s US economic agenda also includes the release of final second-quarter GDP and durable goods orders data on Thursday, followed by the key personal consumption expenditures (PCE) price index on Friday. These data will dominate gold prices and the US dollar in the short term.
Gold prices need to effectively break through the $3,800 mark to open up space for further upward movement
Despite technically overbought conditions on the daily chart, gold's recent explosive upward momentum remains unimpeded. Dip-buying on Wednesday suggests that the path of least resistance for gold remains tilted to the upside. However, the overnight pullback in gold prices just before the $3,800 mark could be seen as the first sign of exhaustion among bullish momentum.
Therefore, on the downside, if gold prices fall below the Asian session low (around $3,750), subsequent selling pressure may fall to the $3,710-3,700 support zone. This support range constitutes a strong support for gold prices, and if it is effectively broken, it may trigger a deeper correction.
On the upside, spot gold bulls may need to wait for the gold price to effectively break through and stabilize at the $3,800 mark before they can confirm the continuation of the established upward trend of the past month and then test $3,900.
(Spot gold 4-hour chart, source: Yihuitong)
At 14:20 Beijing time, spot gold was trading at $3774.52 per ounce.
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