Gold (XAU/USD) jumped more than 2% on Thursday to $4,361, moving through the 100-day SMA near $4,320 as weaker US yields and a softer dollar outweighed the Federal Reserve’s latest tightening. West Texas Intermediate (WTI) slipped about 0.16%, while the US Dollar Index (DXY) fell 0.12% to 100.22; in tandem, US Treasury yields dropped 7 basis points to 4.949%. The Fed lifted rates by 25 basis points to a 3.75%–4% range, and its dot plot points to the fed funds rate around 4.10% by end-2026. Markets implied a 53% chance of another hike at the October meeting, according to Prime Terminal.
US jobless claims for the week ending 12 September eased to 196K from 206K, below the 208K forecast, with August Industrial Production due on Friday alongside remarks from Fed Governor Michelle Bowman. Technical levels in view include resistance at $4,400, then $4,450 and $4,500, followed by the 200-day SMA at $4,540. Support sits at the 100-day SMA around $4,323, then $4,300, the 50-day SMA at $4,283, and $4,202. Separately, central banks added 1,136 tonnes of gold worth around $70 billion in 2022, World Gold Council data showed.
Trading Strategies and Technical Levels
We recommend that derivative traders closely watch the $4,367 resistance level in the coming days to confirm a sustained bullish breakout. If gold closes above this threshold, we should consider buying short-term call options or entering long futures positions targeting $4,400 and $4,450. This bullish momentum is highly supported by a classic “bullish engulfing” pattern on the daily chart, showing that buyers are currently in control.
Even though the Federal Reserve recently raised interest rates to the 3.75%-4% range, falling Treasury yields are creating a great environment for gold to rally. Historically, macro data shows that a 100-basis-point drop in real yields typically boosts gold prices by 10% to 15%, making the current yield drop to 4.949% highly significant for options pricing. Derivative traders can take advantage of this inverse relationship by utilizing call spreads to limit premium costs while capturing the upside.
Market Support and Risk Management
We must also remember that structural demand remains incredibly strong, providing a solid safety net against sudden market drops. Recent data from the World Gold Council shows that global central banks have consistently purchased over 1,000 tonnes of gold annually, which helps keep prices stable during broader market swings. This massive institutional backing means that any near-term dips toward the 100-day Simple Moving Average at $4,323 should be viewed as solid buying opportunities rather than a reason to panic.
To protect our capital, we must set strict stop-losses or exit triggers just below the key support level of $4,300. If the price falls below the 100-day Simple Moving Average of $4,323, we should quickly pivot our strategy and consider buying protective puts. A drop below this level could easily trigger a sell-off down to the 50-day Simple Moving Average at $4,283.
