On Friday, August 29th, during early Asian trading, spot gold pulled back slightly to around $3,410, though this minor retreat doesn't diminish yesterday's impressive performance. On Thursday, gold powerfully broke through the $3,400 psychological barrier, reaching a peak of $3,423 per ounce and establishing a five-week high. This surge was driven by a combination of three factors: a weakening US dollar, Federal Reserve policy uncertainties, and inflowing safe-haven capital. Silver also delivered strong performance, climbing to its highest level in over a month, with the entire precious metals sector displaying robust momentum.
Notably, despite Thursday's release of negative unemployment claims data, gold remained resilient without declining. Supported by the continued weakening of the US dollar, gold prices kept reaching new highs, ultimately touching the key $3,420 level precisely. While this rally met expectations, investors should exercise caution: despite the current bullish trend, excessive optimism is not advisable. Gold's medium-term correction may be imminent, potentially limiting further significant upside.
**Bullish on Gold but Not Chasing Higher - Beware of High-Level Pullback Risks**
Gold remains in a strong bullish formation, but Friday's strength-to-weakness transition point deserves close attention. Today's downside support is seen at $3,400-3,380, with extreme scenarios potentially testing $3,350. Reviewing this week's performance, we maintained a bullish stance for four consecutive trading days, with targets precisely locked in the $3,400-3,420 range. However, starting Friday, caution is warranted for strength-to-weakness transition signals within the bullish trend.
Although Thursday's negative unemployment claims data was bearish, the significant decline in the US Dollar Index prevented gold from adjusting as expected. This doesn't change the prediction of an upcoming technical correction, as current technical indicators have met adjustment conditions, awaiting clear market signals. The daily timeframe may likely form a topping pattern, with expectations for a declining wave to complete the adjustment either this Friday or early next week. Therefore, despite gold remaining in a bullish trend, I lean toward expecting a high-level pullback and do not recommend continued upward chasing.
**Technical Analysis Perspective**
From a technical standpoint, gold's daily chart has closed near the upper Bollinger Band, with indicators showing severe divergence. The market currently lacks only one wave of downward momentum - once the daily chart closes bearish, a deep correction will inevitably follow. The 4-hour timeframe has even formed a doji signal at the top. If today breaks below the $3,400 moving average support, it would confirm a short-term peak, with downside targets toward $3,380 and potentially testing the $3,350 low.
Current gold trends no longer warrant continued bullish outlook. Investors are advised to shift toward high-level short positions, capitalizing on the bull-to-bear transition opportunity. For specific operations, after gold surged to $3,423 at midnight Thursday, this morning's opening at $3,415-3,420 presents opportunities for gradual short entries. Asian and European sessions should focus on the $3,400 level's performance. If effectively broken, tonight's PCE data release could accelerate the decline toward $3,380. With sufficient downward momentum, today's medium-term target could reach $3,350. Investors are urged to adjust their trading strategies promptly.