Gold has experienced a strong breakout, continuing a long-term bull market trajectory that began post-pandemic at $2000. After reaching a record high of $3500 in April and a five-month consolidation, gold is rising again due to anticipated changes in US fiscal and monetary policies.
The current breakout’s target is projected to be $4000, based on the measured consolidation range. Recent market activity supports this estimate, with a minor dip presenting an opportunity for engagement.
Compelling Fundamentals Driving the Market
Compelling fundamentals, including shifts in the global trade order, are influencing the market. Notable geopolitical developments involving Chinese, Indian, and Russian leaders suggest further changes ahead.
Although this season is typically unfavourable for gold, conditions are expected to improve come November. The situation may require patience, as there is potential for further fluctuations or a retest of the previous range.
Since gold’s price was $2000, there has been a consistent upward trajectory that remains difficult to dispute given current circumstances.
The recent breakout in gold above the five-month consolidation range is a significant signal for us. With the August 2025 jobs report coming in weak for the third straight month, the Federal Reserve appears to have little choice but to accelerate its easing cycle. This monetary policy shift, combined with the CBO’s latest projection of a fiscal deficit exceeding $2.5 trillion, is lighting a fire under precious metals.
Strengthening Fundamental Picture
The fundamental picture is strengthening, especially with global de-dollarization trends picking up steam. The images from the BRICS+ summit this week were more than just a photo op; reports show their central banks collectively bought a record 200 tonnes of gold in the second quarter of 2025. This institutional demand creates a powerful floor under the market, suggesting any dips will be short-lived.
For traders, this signals a time to position for the move towards the $4,000 measured target. Given the strong momentum, buying out-of-the-money call options, such as the December $3800 or January 2026 $4000 strikes, offers a defined-risk way to capture significant upside. The one-day drop we saw yesterday to the $3550 area was a classic retest of the breakout level and provided an excellent entry point.
We saw a similar setup in the years following the 2008 financial crisis, where monetary stimulus and government spending led to a multi-year bull run in gold. Open interest in COMEX gold futures has already surged nearly 15% this week, confirming that new, larger players are entering the market to chase this move. The capital flows are validating the breakout and suggest this is the start of a major new leg up.
While September and October have historically been choppy for gold, the powerful fundamental drivers are likely to overwhelm typical seasonal patterns. For those wary of a false move, using bull call spreads can help finance the position and reduce premium decay while waiting for the seasonally strong period to begin in November. This allows us to stay in the trade through any potential consolidation before the next surge higher.
