Gold Rockets to $3,868: Can Bulls Push XAU/USD to the $4,000 Breakout in 2025?
Gold hit $3,868 on Tuesday, its best month in 14 years. The rally is being driven by fears of a US government shutdown and growing...
Quick overview
- Gold reached $3,868, marking its best month in 14 years due to fears of a US government shutdown and expectations of Fed rate cuts.
- Traders are anticipating an 89% chance of a 25-basis-point cut at the next Fed meeting, indicating a belief in easier monetary policy ahead.
- Political uncertainty in Washington is enhancing gold's appeal, with analysts suggesting a potential rise to $4,000 by year-end.
- For traders, a disciplined approach is recommended, focusing on buying the dip rather than chasing highs, with ideal entry points identified.
Gold hit $3,868 on Tuesday, its best month in 14 years. The rally is being driven by fears of a US government shutdown and growing expectations of Fed rate cuts, both of which are keeping demand for safe-haven assets high. Traders are pricing in 89% chance of a 25-basis-point cut at the next Fed meeting, so the market is convinced of easier monetary policy ahead.
Political uncertainty is adding to gold’s appeal. Lawmakers in Washington are gridlocked and could shut down the government, which would disrupt services and halt economic data releases. Meanwhile, Fed officials are cautioning, some saying rates need to be high enough to control inflation even as the market is pricing in more cuts. So analysts think $4,000 is within reach by year-end.
Gold Technicals Overbought
From a chart perspective, the breakout has been decisive. Gold is above the upper channel and has been making higher lows since mid-September. Once price broke above $3,791, the rally was on and we saw an aggressive move to current levels.
Candlestick action is a “three white soldiers” pattern, a bullish signal. But the RSI is at 78, overbought and suggesting momentum may be stretched. Fibonacci extensions at $3,882 and $3,891 are immediate resistance, $3,820 is support if we see profit-taking and the 50-SMA at $3,742 is still sloping up, reinforcing the trend. The 100-SMA at $3,598 is deeper support.
Gold Trade Setup: Buy the Dip, Not the High
For those who want a disciplined approach, chasing the high is risky with momentum so stretched. A better approach would be to wait for a pullback:
- Ideal entry: $3,840-$3,820 support zone
- Confirmation: Bullish reversal candles like a hammer or engulfing pattern
- Stop-loss: Below $3,800 to limit downside
- Targets: $3,891 and $3,906 near Fibonacci extensionsBuy the dip.
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