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

Zhang Yaoxi: Gold Prices Encounter Resistance, Take Profits, Positive Outlook Still Remains, Retracement Still Possible for Bullish Continuation

On the previous trading day, Tuesday (February 24): International gold faced 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 oscillating 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 encountered resistance and retraced; 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 the $5,160–$5,186 range. At the US market open, it again plunged to an intraday low of $5,094.07, then bottomed out and rebounded but was hindered by intraday resistance, ultimately closing at $5,143.70. The daily range was $155.36, down $83.56, a 1.6% decline.

Outlook for Wednesday (February 25): International gold opened with support from moving averages, stabilizing after a decline. 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, Goolsbee stated that rate cuts should not be considered until there is more evidence that inflation is easing, maintaining an optimistic outlook for further rate cuts this year. Collins indicated that rates are likely to stay at current levels 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 governor Waller is set to succeed Powell as chair in May, and the Trump administration clearly favors low-interest-rate policies, leaving 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.

Thus, short-term retracements and declines are influenced by temporary factors. In the first half of the year, geopolitical tensions, tariff concerns, and central bank purchases will dominate, while the second half will be characterized by expectations of rate cuts. Multiple safe-haven factors and structural demand continue to provide solid support at the bottom. Amid ongoing global uncertainties, gold remains a key safe-haven asset and trust anchor, with its long-term value still prominent. Gold prices are expected to maintain a bullish trend throughout the year, continuously reaching new highs.

Technically, on the monthly chart, gold in February continued the bearish reversal from January, plunging again. After breaking through the resistance of the upward trend at the start of the year, it found support and rebounded, remaining within a new bullish phase. It also stayed above the 5-month moving average, indicating that the January bearish correction has exhausted, and the new bullish outlook remains valid. The trend is expected to strengthen and rise again.

On the daily chart, gold yesterday faced resistance, declined, and closed lower, with a bearish engulfing pattern suggesting a top and bearish outlook. However, it is currently trading above the upward trend channel and the midline, so any retracement should be limited. Therefore, a pullback to support levels like moving averages can be viewed as a buying opportunity.

Gold: Support levels at $5,130 or around $5,060; resistance at $5,230 or near $5,300.
Silver: Support at $85.30 or around $84.00; resistance at $89.70 or near $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 as trading advice. Operate at your own risk.
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