Driven by growing concerns over US government debt, bets on the “dollar debasement trade” have surged again, pushing gold back above key resistance levels. Still, analysts warn that after a 15‑percent monthly gain in August, gold shows short‑term overbought signals. Further upside hinges on long‑term Treasury yield movements and whether key technical supports can hold.
Debt Fears Fuel Gold’s Advance
Fawad Razaqzada, Market Analyst at FOREX.com, noted worries over US government debt are fuelling a fresh dollar‑debasement trade that has lifted gold past important resistance. Meanwhile, the US Treasury’s plan to buy long‑dated government bonds to lower borrowing costs has helped stabilise the long end of the yield curve.
Razaqzada said the market reaction to the Treasury’s expanded long‑bond purchases “has not been overwhelmingly enthusiastic”, yet investors acknowledge authorities have additional tools to cap yields. A critical market question now: will parts of the debasement trade unwind if long‑term yields keep drifting lower moderately?
He added that unless long‑dated bond yields see “meaningful declines”, any dips in gold will likely be viewed as buying opportunities.
Fierce Tussle Around $4600
Despite mild bouts of selling pressure intraday, gold is trading near $4600 per ounce. Spot gold last stood at $4601.60 per ounce, little changed on the day.
According to Razaqzada, gold’s near‑term direction will depend heavily on technical behaviour. Even amid profit‑taking episodes, bulls remain in control of the market.
He pointed out gold has reached the major resistance zone of $4655‑$4700, an area that triggered the last round of sell‑offs back in May. Now that prices have revisited this zone, selling pressure has started to emerge. Traders are watching whether selling will intensify or merely trigger a brief pause before another leg higher.
Key Supports At $4515 And $4400
From a technical standpoint, Razaqzada maintains the bias remains bullish. Gold has broken above the 50‑day and 200‑day moving averages plus multiple near‑term resistance levels. Some former resistance levels may now act as supports, though their effectiveness still needs confirmation.
He emphASIsed that market participants should watch retests of these levels after pullbacks; failure to bounce quickly on dips could signal trouble for bullish positions.
On support levels, he first highlights around $4515 per ounce, a former resistance point sitting close to the 200‑day moving average. The next major support lies near $4400 per ounce.
Razaqzada warned a break below both supports could open further downside. That said, since bears failed to push gold decisively beneath the major long‑term support at $4000, market control has stayed with bulls following bears’ failed attempts.
In terms of market logic, further downward pressure on long‑term Treasury yields can improve the relative appeal of non‑yielding gold. Conversely, stabilising and rebounding yields may bring heavier profit‑taking for gold’s short‑term rally. Markets remain focused on the interplay between debt worries, yield swings and technical resistance zones.