Gold prices eased on Tuesday into US trading after reaching a fresh three-month high of $4,697, then slipping to around $4,635 following an intraday low of $4,618. A firmer US Dollar weighed on the USD-priced metal, with the Dollar Index at about 99.02 after touching 98.56 last week, its weakest level since 14 May. The pullback followed the recent rally that pushed the Relative Strength Index into overbought territory, though broader conditions continued to underpin bullion.
Flows into Gold-backed exchange-traded funds remained supportive: World Gold Council data showed global Gold ETFs took in $3.52 billion, equivalent to 23.6 tonnes, lifting year-to-date inflows to $21.34 billion, or 116.1 tonnes. In rates markets, TD Securities pointed to US Treasury buying that could rise to $8 billion between 9 September and 4 November. Elsewhere, ADP Employment Change four-week average increased to 11.75K from 9.5K, while WTI was down nearly 3.5% on the day. Technically, price is above 50-, 100- and 200-day SMAs clustered between $4,185 and $4,520; resistance sits near $4,700 then $4,850, with support at $4,520, $4,379, $4,186 and $4,000.
Trading Strategies for the Gold Pullback
We suggest derivative traders look to exploit the current minor pullback in gold as a prime buying opportunity rather than a sign of a structural trend reversal. While the metal has retreated slightly from its recent three-month high of $4,697 to around $4,635 due to profit-taking, the underlying bullish momentum remains incredibly strong. We should consider using short-term option strategies, like bull call spreads, to capitalize on this temporary dip before the next leg up.
The macro environment is highly supportive, especially with Treasury Secretary Scott Bessent’s plan to boost Treasury buying to $8 billion between September 9 and November 4 to control long-end yields. This massive liquidity injection is already reigniting fears of dollar debasement, a scenario that historically drives capital straight into hard assets. We recommend taking long positions in gold futures to front-run this upcoming liquidity wave.
Institutional Flows and Volatility Outlook
Recent data from the World Gold Council confirms that institutional money is aggressively backing this rally, with global gold ETFs attracting $3.52 billion in net inflows just last week. This brings year-to-date inflows to a staggering $21.34 billion, reflecting strong, sustained demand from European and Asian buyers. Such massive capital flows provide a solid floor for prices, making any deep corrections highly unlikely.
We must also brace for heightened volatility in the coming days as the US launches “Operation Economic Outcast” sanctions against Iran, driving safe-haven demand. Additionally, all eyes are on Fed Chairman Kevin Warsh’s upcoming speech at the Jackson Hole Symposium this Friday, which could trigger sharp market moves. Derivative traders should use volatility options, such as straddles or strangles, to profit from these impending macroeconomic catalysts.
From a technical perspective, gold remains comfortably above its 50-day, 100-day, and 200-day moving averages, confirming an entrenched uptrend. Although the daily RSI near 71 warns of overbought conditions, we expect initial resistance at $4,700 to break soon, opening the door to $4,850. We advise maintaining a core long bias while placing protective stop-losses just below the immediate support level of $4,520.
