Gold breaks above $4,048 as central bank buying fuels $4,100 target

Gold has broken above its descending trendline and reclaimed key moving averages, with central bank buying and technical momentum pointing toward a test of $4,100.

Gold traded at $4,048 per ounce on COMEX on Tuesday, up from a successful defense of the $4,000 demand zone, after breaking above its descending trendline on the 2-hour chart.

Central banks bought a net 41 tonnes of gold in May, led by Poland at 18 tonnes and China at 10 tonnes, the World Gold Council said Tuesday. Poland has amassed 64 tonnes so far this year, while China's reserves have grown to 2,331 tonnes, representing 9% of total reserves.

Gold's technical position strengthened after prices recovered the 50-period exponential moving average at $4,021.55 and the 100-period EMA at $4,038.93 on the 2-hour time frame. The relative strength index rose to 62, reflecting strengthening momentum without entering overbought territory. The next resistance sits at $4,064.08, ahead of $4,100.37 and $4,139.71. Support lies at $4,021.28, with downside protection at $4,000.00, $3,990.15 and $3,959.00.

A sustained move above $4,064 could open the path toward $4,100, a level that would represent a 1.3% gain from current prices. State Street sees gold reaching $5,000 per ounce by 2026, according to a recent report. On the downside, a failed breakout may result in a retest of the $4,021-to-$4,000 demand zone as bulls wait for better conditions to push prices higher.

The macro backdrop remains mixed for precious metals. Recent de-escalation between the U.S. and Iran in the Middle East has reduced the risk that rising oil prices will feed inflation, which could have further stoked Fed rate-hike fears. Still, the market prices in 64% odds of a September rate increase, according to Bloomberg data, a factor that continues to weigh on the non-yielding status of gold and silver.

Silver Tests Trendline Resistance Near $58

Silver traded at $57.86 per ounce on COMEX, recovering from lows near $55.00 as bulls attempt to reclaim the descending trendline in place since early June. Prices moved above the 50-period EMA at $57.68 but remain below the 100-period EMA at $59.22, suggesting a short-term recovery that has yet to confirm a broader trend shift.

The RSI recovered to 58, gaining positive momentum but remaining below overbought levels. Near-term resistance is at the trendline near $58.00, followed by $59.15, $62.75 and $64.86. Support sits at $54.92, with further downside protection at $52.67 and $50.51.

Investors are betting that strong demand from AI-related hardware manufacturing, energy and solar power generation, and electronics production will offset outflows from investment-related demand, which has waned as expectations that the Federal Reserve will hold interest rates higher for longer persist. A confirmed silver breakout above the trendline and $59.15 resistance would signal a broader recovery in precious metals, potentially amplifying gains across the sector. Absent such a move, consolidation may prevail, with the $54.92 support level at risk of being tested.

This article is for informational purposes only and does not constitute investment advice.