Central Bank Demand, Technical Setups, and Geopolitics Fuel Long-Term Upside
XAU/USD Positioned for Historic Breakout as Sovereign Buyers Drive Demand Shift
Gold (XAU/USD) is consolidating just below $3,370/oz, holding bullish momentum as powerful macro, technical, and institutional forces align for what could be a historic continuation of its uptrend. With the current price near AUD $5,131.37, gold is building energy within a classic bull pennant pattern, poised for a breakout toward $3,578 and potentially as high as $3,603.
The yellow metal’s price action is carving out higher lows above the critical $3,300 threshold, where both the 20-day and 50-day moving averages have now turned supportive. Friday’s move above $3,366—clearing a previous swing high—was a significant technical signal, suggesting buyers are regaining control.
Key Levels in Focus: $3,435 to $3,451
The next upside trigger is at $3,435. A confirmed close above this level would activate the bullish pennant breakout, opening a path to the ABCD extension target at $3,578. Beyond that, the 127.2% Fibonacci extension of the April downtrend suggests $3,603 as a stretch target.
Importantly, the $3,322–$3,369 support zone remains structurally intact, with $3,250–$3,267 acting as a strong demand base. Any pullback toward these levels should be viewed as an opportunity—not a threat.
Central Banks Take Control: A Structural Demand Shift
Since Q3 2022, the landscape for gold has changed dramatically. Central banks have been buying over 1,000 tonnes of gold annually—more than double the average of the prior decade. The World Gold Council’s latest survey shows 95% of central banks plan to increase reserves over the next 12 months, with none planning to reduce them. This demand isn’t cyclical—it’s structural.
The driving force? A rising need for monetary sovereignty. In a world grappling with war, inflation, and financial sanctions, gold has become a hedge against weaponised currencies and a way to bypass global financial chokepoints.
Countries like China, Türkiye, India, and Poland are leading the charge. China, in particular, is offloading U.S. Treasuries and increasing gold holdings in a direct move away from dollar dependence. Middle Eastern nations are following suit, with Qatar, the UAE, and Oman accumulating hundreds of tonnes.
Poland has explicitly stated its gold buying is driven by geopolitical resilience. These are not speculative plays—they’re strategic moves to protect national reserves in an unstable financial world.
Retail Demand Collapses: Institutional Hands Hold the Wheel
While sovereign buyers dominate, retail demand is in retreat. Record-high prices have dampened jewellery consumption across Asia. In Pakistan, gold prices have more than doubled in three years, forcing consumers to rent imitation jewellery for weddings—a practice previously unthinkable.
This divergence highlights a decisive shift: the price of gold is no longer dictated by consumer sentiment. Institutional and sovereign buyers are now the driving force—turning gold into a financial weapon, not just a decorative asset.
Inflation Hedge Makes a Comeback
Gold’s historical role as an inflation hedge has resurfaced strongly since 2020. Central banks are acutely aware of fiat debasement and geopolitical risk, and gold remains the only asset immune to default, dilution, or political interference.
Despite real yields struggling to stay attractive, gold continues its upward grind, confirming its appeal as a non-correlated safe haven in a world where traditional assets face compression.
Technical Outlook: Still Bullish – Buy on Dips
The technical chart for XAU/USD supports a continuation narrative. As long as gold holds above $3,250, the ascending triangle and pennant formation remain valid. The rising 20-day and 50-day MAs are converging with support, increasing the likelihood of an upside breakout.
Watch for:
Breakout above $3,435–$3,451: Confirms bullish continuation.
Pullbacks to $3,250–$3,267: High-conviction accumulation zones.
Upside targets: $3,578 and $3,603.
Critical support: $3,149. A break below would negate the bullish setup.
Final Word: BUY ON DIPS – The Regime Has Changed
This is not a speculative rally driven by ETF inflows or short squeezes. It’s a structural regime change in gold’s global role—from jewellery to geopolitical safe haven, from consumer product to sovereign asset.
With central banks now firmly in control and technicals signalling a continuation, FirstGold advises investors to buy on dips while the bullish structure remains intact. Price action above $3,451 could unlock a fresh leg higher, with $3,578 and $3,603 firmly in sight.
XAU/USD Verdict: BULLISH CONTINUATION
Current Gold Price (AUD): $5,131.37
Accumulation Zone: $3,250–$3,267
Breakout Zone: $3,435–$3,451
Target 1: $3,578
Target 2: $3,603
Critical Support: $3,149
Gold is no longer just an asset—it’s a strategic statement.
