Gold Returns Above Key Trend Line: Can the Bulls Regain Control?

　　Source: Wallstreet News

　　Gold prices have rallied for four consecutive days, regaining momentum and forcefully breaking through key moving averages! Driven by the confluence of a weaker dollar, continued central bank gold purchases, and a cooling of rate hike expectations, gold is seeing an opportunity for a rebound. However, resistance remains at the $4,800 mark, with inflation and rate hike concerns unabated. Amidst key bullish and bearish battles, can this round of the “gold rush” continue?

　　Gold is regaining its momentum. After rising for four straight trading sessions, gold prices have climbed above key short-term technical moving averages, sparking market discussions about whether this rebound can be sustained.

　　On Friday, gold futures closed up 0.44% at $4,720.40 per ounce, marking the longest streak of gains since April 9. For the week, the cumulative gain reached 1.95%, closing at $90.50 per ounce. According to Tyler Richey, technical analyst and co-editor at Sevens Report, gold prices breached the 21-day moving average (blue line below)—a key short-term trendline traders use to assess improving momentum. At the same time, for a second straight trading day, gold tested the 50-day moving average (red line below), widely seen as a more important indicator for gauging medium-term direction.

　　The primary driver of this round of gains comes from the weakening dollar. Lukman Otunuga, Head of Market Research at global brokerage FXTM, noted that optimistic expectations of a potential US-Iran peace agreement have eased some geopolitical tensions, pressuring the dollar. On Friday, the ICE US Dollar Index fell 0.2% to 97.84. Since gold is priced in dollars, a weaker dollar typically reduces the purchasing cost for holders of other currencies, thereby boosting demand.

　　Multiple factors providing support

　　In addition to the weaker dollar, correlations between energy prices and Federal Reserve policy expectations have also supported gold prices. State Street Investment Management's Global Head of Gold Strategy, Aakash Doshi, pointed out that as the risk of a sharp spike in oil prices diminishes, the pressure on the Fed to raise rates may also ease, which is positive for gold.

　　Ongoing central bank gold purchases continue to provide a floor for the market. Doshi also noted that China is consistently increasing its gold reserves—according to data released Thursday by the People's Bank of China, the country has increased its gold holdings for 18 consecutive months.

　　Gold has risen 9.1% year to date, though it remains about 11.2% below the all-time high of $5,318.40 per ounce set in January. Looking back, gold saw significant gains last year and into early 2026, fueled by a global wave of central bank gold buying and market concerns about fiscal expansion and currency depreciation—especially from the US. But after hitting its record high in January, gold prices quickly pulled back.

　　Technical signals have yet to send a clear bullish message

　　Despite the recent rebound, the technical outlook remains cautious overall. Tyler Richey stated that gold is currently attempting to break out of the weak sideways pattern formed since early April, but chart patterns have yet to provide a clear bullish signal, and the near-term trend remains weak.

　　He noted that for bulls to regain control of the market, gold prices need to decisively break through the $4,800 to $4,900 per ounce area; a close below $4,400 would be a warning signal.

　　Inflation and rate hike expectations pose potential resistance

　　The uncertainties facing gold have not faded. Inflation worries could quickly turn into upward price resistance. According to CME FedWatch data, federal funds futures traders currently assign at least a 14.4% probability to the Fed raising rates at least once before the end of the year.

　　Rising rates typically increase the opportunity cost of holding gold, exerting pressure on prices. This means that if inflation data surprises to the upside or the Fed adopts a more hawkish stance, gold's current rebound momentum could be challenged.

Editor: Liu Wanli SF014