Gold returns above the key trend line—can the bulls regain control?

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Gold is regaining momentum. After four consecutive trading days of gains, gold prices have climbed back above key short-term technical moving averages, prompting market discussions about whether this rebound can continue.

On Friday, gold futures closed up 0.44% at $4,720.40 per ounce, marking the longest streak of gains since April 9. The weekly cumulative increase reached 1.95%, with a rise of $90.50 per ounce. According to Tyler Richey, technical analyst and co-editor at Sevens Report, gold prices broke through the 21-day moving average (blue line in the chart below) — a key short-term trend line used by traders to judge whether momentum is improving — and tested the 50-day moving average (red line below) for the second consecutive trading day, which is generally seen as a more important indicator for measuring mid-term direction.

The main driving force behind this rise is the weakening of the US dollar. Lukman Otunuga, Head of Market Research at global broker FXTM, noted that optimistic expectations for a potential US-Iran peace agreement have eased some geopolitical concerns, putting pressure on the dollar. On Friday, the ICE US Dollar Index fell 0.2% to 97.84. Because gold is priced in dollars, a weaker dollar typically reduces purchasing costs for holders of other currencies, boosting demand.

Multiple Factors Provide Support

In addition to the dollar’s weakness, the interplay of energy prices and Federal Reserve policy expectations also supports gold prices. Aakash Doshi, Global Head of Gold Strategy at State Street Investment Management, pointed out that with the risk of another sharp rise in oil prices diminished, the Fed is likely facing less pressure to raise rates, which is positive for gold.

Central bank gold-buying continues to underpin the market. Doshi also noted that China has kept increasing its gold reserves — according to data published by People's Bank of China on Thursday, China has increased its gold holdings for 18 consecutive months.

Gold has risen 9.1% this year, but is still about 11.2% below its record high of $5,318.40 per ounce set in January. Looking back, gold surged last year and continued this trend into early 2026, driven by a global central bank gold-buying spree and concerns about fiscal expansion and currency depreciation — particularly due to US factors. However, after hitting a historic high in January, gold prices soon pulled back.

Technical Signals Not Yet Clearly Bullish

Despite the recent rebound, technical signals overall remain cautious. Tyler Richey said that gold is now attempting to break out of the weak sideways pattern formed since early April, but the chart pattern has not yet given a clear bullish signal, with the recent trend still looking weak.

He pointed out that gold needs to break through the $4,800–$4,900 per ounce range more decisively to confirm bulls are back in control; whereas a closing price below $4,400 would be a warning signal.

Inflation and Rate Hike Expectations Pose Potential Resistance

The uncertainties facing gold have not disappeared. Inflation concerns could quickly turn into upward pressure on prices. According to CME FedWatch data, pricing by federal funds futures traders currently shows at least a 14.4% probability of the Fed raising rates at least once before year-end.

Rising interest rates usually increase the opportunity cost of holding gold, putting pressure on gold prices. This means that if inflation data exceeds expectations or the Fed’s policy stance turns more hawkish, gold’s current rebound momentum could be tested.

Risk Warning and DisclaimerThe market involves risks; investment requires caution. This article does not constitute personal investment advice and has not considered individual users’ specific investment objectives, financial status, or needs. Users should assess whether any opinions, views, or conclusions in this article suit their particular situation. Investing accordingly is at one's own responsibility. ```