Gold Surges 4.2% in a Single Day! Breaks Key Resistance Level as Bullish Signals Illuminate

Author: Wall Street Watch

Gold experienced a strong surge in overnight trading, becoming the most dazzling asset of the day.

During the night, spot gold reached a peak of $4,328.20 per ounce, closing at $4,308, marking a daily increase of 4.20%, or $173.80, the largest single-day gain in five months.

This trend not only broke through the descending triangle pattern that had suppressed gold prices for over six weeks but also simultaneously rose above the 20-day and 50-day moving averages, illuminating bullish signals on the technical front.

This round of price increase was driven by multiple catalysts.

Trump's latest remarks on reopening negotiations regarding the Strait of Hormuz ignited market expectations for geopolitical premiums;

At the same time, the global central bank gold reserve data for the second quarter exceeded expectations, with the Bank of Korea notably resuming gold purchases after 13 years, further strengthening market confidence in sustained central bank demand.

It is noteworthy that this surge in gold prices was accompanied by a significant cooling of expectations for Federal Reserve interest rate hikes—CME FedWatch tool shows that the probability of maintaining interest rates in September has risen to 45%, the highest in over a month.

Bullish forces in gold are regrouping. The triple resonance of technical breakthroughs, central bank accumulation, and a shift in macro expectations has brought the next key resistance level of $4,400 into view.

Trump's Remarks Ignite Geopolitical Premium

The direct trigger for this round of gold price increase came from Trump's latest remarks regarding the Strait of Hormuz. According to Xinhua News Agency, the U.S. Axios news website reported on the 4th that regional sources and U.S. officials indicated that the U.S., Iran, and Oman are "close to reaching" a temporary agreement to reopen the Strait of Hormuz, with the U.S. hoping to announce the agreement on the 5th.

Reports state that Trump mentioned Iran is actively negotiating to reopen the Strait of Hormuz, proposing that Iran will control ships entering the strait via the northern route, while Oman will oversee ships exiting via the southern route, initially allowing a 60-day free passage period, which may be extended further.

This statement is not without basis. Iran has publicly stated that it is not negotiating directly with the U.S. but is discussing the opening of the waterway through Oman, which has long acted as a mediator between Washington and Tehran. The Strait of Hormuz carries about 20% of the world's maritime oil flow and accounts for approximately 15% of global oil sales, making its status crucial for the global energy market.

The warming of geopolitical narratives provides short-term safe-haven premium support for gold and has become an important trigger for this breakthrough.

Central Bank Accumulation Hits Record High, South Korea Returns to Market After 13 Years

Beyond geopolitical factors, the structural changes in central bank demand represent a more long-term support for this round of bullish logic in gold.

According to data from the World Gold Council, global central banks purchased a total of 288.9 tons of gold in the second quarter, a year-on-year increase of 62%, marking the strongest second-quarter performance on record.

Poland had the highest purchase volume, reaching 51 tons, bringing its total reserves to a historical high of 632 tons, with a target of 700 tons. Adam Glapiński, the Governor of the National Bank of Poland, stated frankly: "We have been continuously buying gold, taking advantage of the recent price corrections." China added 33 tons, continuing its long-term buying pace.

The most noteworthy market development is that the Bank of Korea has resumed gold purchases after a 13-year hiatus. Seoul stopped buying gold in 2013, coinciding with a significant drop in gold prices, which put immense pressure on the central bank due to substantial paper losses, leading to the then-governor being summoned to Congress for questioning.

However, history has provided an answer—90 tons of gold purchased by South Korea at an average price of $1,629 per ounce back then is now valued at approximately $11.8 billion, about $7 billion higher than the initial purchase cost.

This time, the scale of the Bank of Korea's gold purchases is limited, planning to acquire only 4 to 5 tons of gold output from domestic copper-zinc smelting by-products annually, maintaining reserves at about 104.4 tons.

But its symbolic significance far outweighs the actual volume—this marks the re-entry of an economy that had long been absent from the gold market.

Jung Hee-sub, head of the reserve management department at the Bank of Korea, stated that the decision to purchase gold was not based on specific price judgments but was made after comprehensive consideration of domestic and international gold prices and market conditions.

Cooling Rate Hike Expectations, Technical Bullish Signals Fully Confirmed

In addition to the geopolitical and central bank narratives, the marginal changes in Federal Reserve policy expectations also provide macro background support for this gold price increase.

CME FedWatch tool shows that market expectations for the Federal Reserve to maintain interest rates in September have risen to 45%, the lowest interest rate hike expectation level in over a month. The cooling of rate hike expectations has reduced the opportunity cost of holding gold, further opening up upward space for gold prices.

On the technical front, this breakthrough is also significant. Gold prices not only effectively broke through the descending triangle consolidation range that had been suppressing prices since June 22 but also simultaneously rose above the 20-day and 50-day simple moving averages—the latter being effectively broken for the first time since March. Bloomberg strategist Cameron Crise pointed out that despite gold's single-day surge of over 4%, its traditional driving factors model suggests that gold "should have" slightly declined, indicating that there is additional momentum in this increase beyond conventional explanations.

Looking ahead, the next target for bulls is around $4,400, a region that aligns closely with historical turning points from November to December 2025, and is also near the 23% Fibonacci retracement level of the price drop from historical highs to recent lows around $4,020.

If bullish momentum weakens, initial support levels for a pullback are the 50-day moving average at $4,243, the $4,200 round number, and the descending trend line around $4,070, which has now turned from resistance to support.

Deutsche Bank analysts Michael Hsueh and Bryant Xu expect the year-end target price for gold to be around $4,700, while JPMorgan's revised target price still sets the average for the fourth quarter at $4,500.

The World Gold Council, in its mid-year outlook, holds a more conservative stance, believing that if there are no significant changes in the macro environment, gold prices will remain within a 5% range around $4,100.

Analysts also remind that central bank gold purchases play more of a "supporting" role rather than being the main driver of significant price increases—the true sustained bull market still relies on the large-scale return of retail investors and funds.