Zhang Yaoxi: Gold prices face resistance and take profits, but the positive outlook remains; pullbacks are still bullish

Zhang Yaoxi: Gold prices face resistance, take profits, and still have bullish potential despite pullbacks

On the previous trading day, Tuesday (February 24): International gold encountered resistance and declined, affected by a strengthening dollar and profit-taking. Additionally, several Federal Reserve officials warned that inflation remains too high, significantly cooling expectations for rate cuts, which weighed on gold prices driven by safe-haven sentiment. The bullish momentum weakened, but recent trend patterns show a sideways upward movement. The recurring escalation of geopolitical tensions in the Middle East has become an important recent driver for the gold market. The prospect of rate cuts this year still exists, so the market faces resistance and pullbacks; reaching support levels remains an opportunity to go long.

Regarding specific movements, gold opened in Asia at $5,227.26 per ounce, hitting an intraday high of $5,249.43 before encountering resistance and retreating, dropping over $100. It then stabilized and rebounded, trading within a $5,160–$5,186 range. At the US market open, it again fell to an intraday low of $5,094.07, then bottomed out and rebounded but was blocked by intraday resistance, ultimately closing at $5,143.70. The daily range was $155.36, down $83.56, a 1.6% decline.

Looking ahead to Wednesday (February 25): International gold opened with support from moving averages, stabilizing somewhat. Meanwhile, the dollar index’s early rebound momentum slowed, providing some support. Therefore, in terms of trading strategy, support levels at the 5-day or 10-day moving averages remain good entry points for long positions.

Fundamentally, yesterday’s comments from Goolsbee suggested that rate cuts should not be considered until there is more evidence of inflation easing, maintaining an optimistic outlook for further rate cuts this year. Collins indicated that rates are likely to stay steady for some time. The diminished prospects for rate cuts have pressured gold bulls. However, the cycle of rate cuts has not ended; Federal Reserve former official Waller is set to succeed Powell as chair in May, and the Trump administration’s preference for low interest rates still leaves room for long-term rate cuts.

Additionally, the recurring escalation and easing of geopolitical tensions have been a long-term driver of the gold market over the past decade. The ongoing fluctuations continue to push gold prices higher in a volatile manner. The overall trend remains bullish.

Therefore, short-term pullbacks and declines are influenced by temporary factors. In the first half of the year, geopolitical tensions, tariff concerns, and central bank purchases dominate, while the second half will likely see expectations of rate cuts. Multiple safe-haven factors and structural demand continue to provide solid support. Amid ongoing global uncertainties, gold remains a long-term safe-haven asset and trust anchor. The year is expected to see continued bullish momentum, with prices repeatedly reaching new highs.

Technically, on the monthly chart, gold in February continued the bearish reversal from January, dropping sharply. After breaking through and then turning support at the upward trendline established earlier this year, it rebounded and maintained within a new bull market zone. It also remains above the 5-month moving average, indicating that the bearish correction from January has run its course, and the new bullish outlook remains valid. The market is expected to stay above this trend support and strengthen further.

On the daily chart, gold yesterday faced resistance and declined, forming a bearish engulfing pattern after a rebound. However, it is currently trading above the upward trend channel and the middle band, so any retracement should be limited. Therefore, a pullback to support levels like moving averages can be viewed as a buying opportunity.

Support levels for gold: around $5,130 or $5,060; resistance levels: around $5,230 or $5,300.
Silver support: around $85.30 or $84.00; resistance: around $89.70 or $91.80.
Note:
Gold TD = (International gold price × exchange rate) / 31.1035

A $1 fluctuation in international gold prices roughly causes a $0.25 change in Gold TD (theoretical).
US futures gold price = London spot price × (1 + gold swap rate × futures days to expiry / 365)
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The above opinions and analysis reflect only the author’s personal views, for reference only, not trading advice. Operate at your own risk.
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