Gold Rally Vies for Acceptance at $4600 as Anti-Fiat Trade Rolls On

Gold Fresh ATH

While much remains up in the air at the moment, with the Dollar grinding in a short-term range and many major currencies echoing that lack of trend, gold prices have been on a consistent tear for almost two years now. To be sure, there has been some pullback along the way, but interestingly, it’s during those pullback episodes that the crowd has seemed most bearish, instead looking for gold to mean revert to prior values; rather than looking for bullish trend continuation and fresh highs, as has been the drive since February of 2024.

At this point, Bitcoin is putting in a strong breakout beyond the 95k level and this appears to be a bit of the ‘gold replacement’ theme that I spoke of in yesterday’s webinar. It does not, however, mean that the rally in gold has to come to an end…

I looked at gold as my top trade idea for 2026 and until inflation in the US gets to a worrying level, which could force the Fed to react with tighter monetary policy, or, perhaps, for mid-term elections to produce a change in Congress that could possibly constrain spending and fiscal stimulus in Trump’s final two years in office, it seems that the fundamental environment is favored for higher gold prices.

At that point, the main complication becomes positioning. I went in-depth on this topic in yesterday’s webinar but the main push-point for market prices is supply and demand, buyers and sellers, and while fundamentals will often have bearing on that fact and how it plays out in markets, it doesn’t mean that trends will price linearly, as the feast-famine nature of human beings will still manifest itself even with proper motive behind any given economic theme.

This is why formations like the bull pennants from last year are so utterly interesting, because they echo that human behavior in consideration of the broader trend. And for traders willing and able to be patient, they can offer opportunities to work with those biases in the direction that the wind has been blowing.

There’s a similar illustration of this at present in the FX market with USD/JPY and I’ll touch on that in an article later today, very similar to what I’ve been talking about for the past few months. In gold, the challenge at this point is just how built in the trend has become…

This doesn’t necessarily mean that prices must reverse, but it does illustrate caution for those looking to chase the move-higher, as tests above $4600/oz have so far illicit profit taking and the trend stalling, very similar to the prior episode at $4550.

Gold Daily Chart

Chart prepared by James Stanley; data derived from Tradingview

Gold Time Frames to Set Opportunity

There remains a path for looking to charts for trend-side opportunity in gold. I looked at a falling wedge formation last week as gold was, at the time, holding resistance inside of the $4500 level. That was showing as a lower-high, inside of the prior print at $4550, but the pullback at that point had shown in an uneven manner, with sellers pushing harder on pullbacks than on tests of fresh near-term lows. That allowed for the build of a falling wedge formation, which is a bullish breakout formation, and that’s what helped to lead to Thursday’s rally and push back up to the $4500 level.

And then on the Sunday open, the move caught another shot-in-the-arm that hasn’t quite abated yet, with prices still holding strong above the $4600/oz level, as of this writing.

Gold Four-Hour Chart

Chart prepared by James Stanley; data derived from Tradingview

Gold Strategy

The past doesn’t predict the future, and anyone using a chart to line up trade ideas should know that. But – trends happen for a reason, and the chart can clearly display that bias and this can offer some element of insight that traders can use when trying to line up trading strategy.

But perhaps more important for strategy is the tenet of support and resistance, that past prices can have some impact on the future, and this is where traders can insert if-then statements, so that if that broader bias does continue, the possible upside can be larger than the risk outlay; and if support does hold in up-trends or resistance in down-trends, risk outlay can be minimized relative to reward potential.

And this is where we’re at on gold:  Yes, it is overbought by a number of vantage points and sure, the trend might turn or reverse, or perhaps just pull back more. But we’re not going to know that until it’s too late. So, for a trader looking to impart strategy, structure is of importance and currently there’s a support test at the psychological level of $4600/oz. Below that, we can see a secondary spot of support around $4575 that held multiple support tests before gold prices launched up to a fresh ATH. That could be a usable level if current support does not hold.

And then below that we have the $4550 level that had set a rigid spot of resistance on two separate occasions in late-December before a sizable pullback developed. To date, that spot hasn’t yet been tested for support after previously showing as resistance. And there can even be a case for $4500 as that point of support as this built a lower-high last week which led to that falling wedge pullback.

But, from that episode last week, the importance of patience is highlighted as a one-sided market can be prone to larger pullbacks as stalling and support breaks lead to more profit taking.

Gold Two-Hour Price Chart

Chart prepared by James Stanley; data derived from Tradingview

--- written by James Stanley, Senior Market Analyst, Global Macro