Technical indicators show gold rally approaching key resistance area

Gold’s rebound is approaching a key resistance area, with technical indicators pointing to bearish entry points.

There is no doubt that gold is one of the best-performing global assets in 2025, rising more than 70% since the beginning of the year, significantly outperforming the S&P 500 Index’s roughly 17% gain. While safe-haven demand and expectations of sharp interest rate cuts from the Federal Reserve have pushed gold prices to new highs, technical indicators show that bullish momentum has slowed as gold prices enter all-time highs, providing a crucial opportunity for short positions to ride the trend.

First: Technical analysis: Consolidation above indicates weak upward momentum.

1. Weekly chart: Pay attention to the callback pressure after the big white candlestick.

Last week, gold closed with a large bullish candle with a lower shadow slightly longer than the upper shadow, closing at $4,531.8 after hitting a high of $4,551.3. While the weekly chart still shows bullish control, price is approaching a key technical target area ($5,000-$5,200). After a sharp rise, the market needs to digest profits, which significantly increases the risk of opening long positions this week.

2. Four-hour chart: Bullish momentum is weakening modestly, indicating a possible trend reversal.

Narrowing Consolidation Bands: The Bollinger Bands indicator is showing signs of tightening, which signals a narrowing of the price range and signals the end of a one-sided uptrend.

Momentum divergence: Although MACD is above the zero line, the decline in bull momentum is not significant and does not constitute a strong continuation signal.

Testing Support Is Necessary: ​​Price needs to test the validity of the $4495-4500 support area. A break above this level would confirm a short-term bearish reversal.

Major Resistance Zone: The target area for buyers is also the defensive area for sellers.

Bulls are currently targeting the psychological level of $5,000 and the $5,200 area (corresponding to the 261.8% Fibonacci extension of October’s retracement). Goldman Sachs expects gold to hit $4,900 by the end of 2026, but also warns that “upside risks are substantial if private sector purchases exceed expectations” – accurately reflecting the growing divergence between bulls and bears at current price levels.

IMPORTANT NOTE: When market consensus becomes excessively focused on a particular price target, it usually means the price may face profit-taking pressure before it reaches that area. The $5,000-$5,200 area is not only a target area for bulls, but also a key defensive area for bears.

3. Basic trading strategy: sell high
Short selling position plan
Admission area: $4400-4430 range

Set stop loss: $4460 (a breach of this level will invalidate the short-term bearish logic)

Target price:

First goal: $4350-4300

Segmentation: Waiting for deeper price adjustments

Strategy support
Technical Analysis: The 4-hour chart shows that bullish momentum is weakening, with narrowing Bollinger Bands signaling a possible trend reversal.

Price Analysis: Prices are close to all-time highs and without a sufficient pullback, any further gains lack a solid foundation.

Risk reward ratio: Entering the $4400-$4430 range, with a stop loss around $30, the potential reward for the first target range is $70-$130. Excellent risk-reward ratio.

fourth. Risk warnings and key points

Bullish signals to watch:

If gold breaks strongly above $4,560, it may retest the area above $4,600.

If the Federal Reserve cuts interest rates faster than expected, it could give gold prices additional momentum.

Bearish confirmation signals:

The four-hour chart closed below the $4495-4500 support zone.

The MACD indicator forms a clear death cross and crosses the zero line downwards.

A clear bearish engulfing pattern or evening star pattern has appeared on the daily chart.

Fifth: Summary

Gold’s outperformance in 2025 reflects safe-haven demand and expectations of lower interest rates. Large profitable long positions were accumulated in the market as the price moved into a key technical target area near $5,000. Technically, the upward momentum has weakened and the 4-hour cycle has entered a consolidation phase, giving trend traders the opportunity to open short positions at higher levels.

Basic operating principles: Wait patiently for the price to rebound to the 4400-4430 resistance area, strictly abide by the stop loss rules, and initially treat it as a short-term callback. If it successfully breaks through the support level below, it can be converted to a medium-term holding transaction.