09.02.202609:14 Forex Analysis & Reviews: Gold Returns to $5,000

The price of gold has confidently surpassed the $ 5,000-per-ounce mark, signaling a return of buyers to the market after a series of exceptionally volatile trading sessions. This surge in demand, amid recent downturns, reflects growing interest in precious metals as a reliable means of capital preservation amid uncertainty.

On Monday, during Asian trading, gold demonstrated noticeable growth, appreciating by 1.7%. This movement is a significant step toward restoring positions following the historic downturn recorded at the end of the previous month. Many market participants attribute this sharp drop to a complex set of factors, including changes in central banks' monetary policies and heightened speculative sentiment.

However, current market activity shows that investors are not rushing to write off gold. The return of buyers seeking opportunities in a declining price environment underscores gold's role as a safe-haven asset. It appears that short-term turbulence has only reinforced confidence in gold's long-term attractiveness, especially amid global economic instability and rising inflation expectations.

The recovery of the price to such a significant level as $5,000 per ounce opens new horizons for further market movement. This may signal the continuation of an upward phase fueled by both fundamental factors and renewed investor confidence. Many experts note that China has played a substantial role in driving gold's growth.

Data released over the weekend showed that the People's Bank of China extended its gold purchases for the 15th consecutive month, highlighting the resilience of official demand—a key component of the prolonged bull market preceding the recent downturn. There are rumors in the market that Chinese regulators have advised financial institutions to reduce their investments in U.S. Treasury bonds, citing concerns about concentration risks and market volatility. Officials have urged banks to limit purchases of U.S. government bonds and directed those with a high proportion of such investments to reduce their holdings. All of this could contribute to new gold purchases in the near future.

Currently, gold has recovered about half of the losses incurred since its fall from the historic peak recorded on January 29 of this year. Silver has also increased in price.

As for future prospects, gold's ability to stabilize above the $5,000 threshold will be crucial in determining whether the market can transition from a reactive bounce to sustained growth.

In terms of the current technical picture for gold, buyers need to overcome the nearest resistance at $5,051. This will allow targeting $5,137, above which it will be quite challenging to break through. The furthest target will be around $5,223. If gold declines, bears will try to take control of $4,975. If this is achieved, a breakout of the range will deal a severe blow to the bulls' positions and push gold down to a low of $4,893, with the prospect of a move to $4,835.