Wen Chengkai: Is the sharp drop from the high level of gold a top? Non-farm payrolls will determine the future market direction.

On April 2nd, international gold continued its recent rebound trend, briefly surging to a high of $4,800 during the Asian trading session, then quickly retreating below $4,700, with a low of $3,650, showing a “rise and fall” oscillation pattern. The core driving forces behind this rebound are the weakening dollar and a phased easing of Middle East tensions, with these dual factors temporarily boosting market risk appetite, while also prompting investors to reassess the current inflation environment.

1. Geopolitical tensions intertwined, causing market sentiment to fluctuate repeatedly

The latest statement from U.S. President Trump has become a key variable disturbing market sentiment: he publicly claimed Iran had proposed a ceasefire, but this was promptly denied by Iran, leading to serious disagreements about the direction of Middle East tensions. Despite expectations of easing, the Strait of Hormuz remains tense, and uncertainties in global energy transportation have not been eliminated—this contradiction between “signal of easing” and “risk concerns” causes market sentiment to oscillate between the two, intensifying short-term volatility in gold prices.

It is worth noting that Trump later added that the U.S. plans to end military operations against Iran “within two to three weeks,” with the main goal of destroying Iran’s remaining military capabilities, while leaving open the possibility of reaching an agreement through negotiations. This statement further amplifies the uncertainty of the situation, making it difficult to establish a clear short-term trend and potentially constraining gold price increases.

2. Macro perspective: a dual game of inflation support and high interest rate suppression

(1) Inflation expectations provide support

Rising energy prices continue to strengthen global inflation pressure expectations. The market generally believes that higher oil prices will pass through cost mechanisms to push up global prices, and gold, as a traditional inflation hedge, gains its allocation value in this context. Additionally, the global gold supply-demand gap is expected to reach 320 tons in 2026 (the largest in nearly a decade), providing underlying support for gold prices due to supply-demand imbalance.

(2) Federal Reserve policies exert downward pressure

At the March 2026 meeting, the Federal Reserve maintained the interest rate range at 3.50%–3.75%, with the dot plot indicating only one possible 25 basis point rate cut within the year, and some officials even leaning toward no rate cuts for the entire year. In a high-interest-rate environment, the opportunity cost of holding gold, an interest-free asset, rises, making it less attractive and exerting clear structural downward pressure on gold prices. However, institutions generally forecast that the Fed may begin a rate-cut cycle in the second half of 2026; once rate cuts occur, the decline in real interest rates will open room for gold to rise.

(3) Central banks’ gold purchases strengthen the “safety cushion”

The continuous buying of gold by global central banks has become a core support for gold prices. In 2025, global central bank net gold purchases reached a record 863 tons; in the first quarter of 2026, net purchases exceeded 300 tons. China’s central bank has increased holdings for 18 consecutive months, and 95% of surveyed central banks plan to continue increasing gold holdings in 2026. This “non-price-sensitive demand” directly limits the space for significant declines in gold prices, forming strong support in the $4,500–$4,800 range.

3. Key data approaching non-farm payrolls as a short-term “decider”

This week’s upcoming U.S. initial jobless claims and March non-farm employment data will be critical variables in determining short-term gold trends: if employment data underperform expectations, it could weaken the dollar’s strength, further reinforcing market expectations of a shift in Fed policy, supporting gold prices; if the data is strong, it may reinforce high interest rate expectations, increasing downside pressure on gold. As a leading indicator for non-farm payrolls, employment data performance will directly influence market sentiment and likely trigger sharp fluctuations in gold prices within key ranges.

4. Technical analysis:

(1) Daily chart: rebound structure faces increasing pressure as it nears previous downtrend line extension. Gold’s daily chart still shows a rebound pattern but is approaching the extension of the previous downtrend line, with technical selling pressure beginning to emerge. The $4,800 level is the key dividing line between bulls and bears: a confirmed break above $4,800 could open further upside space, targeting the $5,000 mark; repeated failure to break through may form a temporary top, risking a pullback. Support is concentrated around $4,560, where previous lows and dense trading volume areas overlap, providing relatively strong support; a break below could trigger deeper correction, but support below $4,500 is reinforced by central bank gold purchases, making a sharp decline less likely. From a momentum perspective, the daily upward slope has slowed, indicating the rebound is losing some strength.

(2) Short-term trend: oscillations intensify with weakening momentum. The 4-hour chart shows that after a short-term rally, gold prices have pulled back, with upward selling pressure clearly increasing. Technical indicators are gradually returning to neutral, with short-term momentum weakening, suggesting prices are likely to oscillate within a range. If prices cannot hold above $4,800, further tests of support around $4,560–$4,600 should be watched carefully. Regarding trading strategies, the previous cautious approach of low buy and bullish outlook remains unchanged, with resistance at $4,800–$4,900 and support at $4,620–$4,560.

5. Overall outlook: high-level oscillation awaiting breakout signals

Currently, the gold market is in a phase of “geopolitical tensions + inflation support + high interest rate suppression + central bank backing,” with no clear trend breakout yet. Gold is expected to continue oscillating within the high range of $4,560–$4,800, and the market awaits clear signals from non-farm data and geopolitical developments to break this balance.

In the medium to long term, the convergence of four major factors—Fed rate cut expectations, central bank gold purchases, de-dollarization processes, and expanding supply-demand gaps—supports a structural bull market for gold. Most institutions forecast that by the end of 2026, gold prices could surge to the $5,400–$6,000 range. Short-term trading should focus on the key resistance at $4,800 and the core support at $4,560; until a breakout occurs, a high-short and low-long strategy can be adopted. Once a breakout happens, follow the trend, and pay close attention to opportunities driven by non-farm data.