Gold ended August on a high, closing at record levels and carrying strong momentum into September. Prices pushed higher in thin holiday trading on Monday, reaching near $3,480 per ounce – their strongest levels in five months – with the $3,500 mark now firmly in sight.
While the breakout occurred during subdued volumes due to the US and Canadian Labor Day holidays, analysts caution that short-term pullbacks are likely. Yet, many see these dips as buying opportunities in a market that remains underpinned by strong safe-haven demand and expectations of easier US monetary policy.
Technical Picture: Eyes on $3,800
The 50-day EMA has acted as a reliable trend guide, now sitting near $3,389. More importantly, gold has just broken out of an ascending triangle formation. The implied technical target from this breakout points towards the $3,800 region, suggesting further upside potential over the coming months.
Drivers Supporting Gold’s Rally
Gold’s renewed strength has been supported by a combination of factors:
Safe-haven demand: Asian equity markets sold off sharply, with Japan’s Nikkei 225 sliding in the wake of Wall Street’s tech-driven declines. Investors have rotated into gold as a defensive play.
Geopolitical and trade risks: A US court ruling challenged former President Trump’s global tariffs, sparking uncertainty around trade policy. Despite this, US officials signalled further negotiations, adding to the risk-off sentiment.
Chinese growth surprise: China’s Caixin Manufacturing PMI rose to 50.5 in August, surprising to the upside and fuelling optimism for stabilisation in the world’s second-largest economy.
Federal Reserve expectations: Markets are now pricing a near-90% chance of a Fed rate cut this month, following softer inflation data. Dovish monetary policy expectations continue to support gold’s non-yielding appeal.
What’s Next?
The next major test for gold comes with US employment data due later this week. Any signs of labour market weakness could reinforce bets on aggressive Fed easing, potentially fuelling the next leg higher in gold. Traders will also be watching speeches from Fed officials and fresh trade developments for direction.
Outlook
With momentum firmly behind it, gold looks set to challenge the $3,500 threshold in the near term. Pullbacks are likely but should be viewed in the broader context of an established uptrend. If the breakout pattern holds, the long-term target of $3,800 remains very much in play.
For now, gold remains the asset to watch as safe-haven demand, central bank policy, and global uncertainty converge to create powerful tailwinds.
