Gold Closes at $2,909: Will Supply Squeeze and Dollar Weakness Push XAU/USD Above $3,000?
After a sharp rebound from $2,832, gold is heating up again—but can bulls overcome resistance at $2,956? | That's TradingNEWS
XAU/USD Bulls Regain Control After V-Shaped Rebound
After plunging from an all-time high of $2,956 to $2,832 in a matter of five sessions, XAU/USD clawed its way back above $2,900 last week with a ferocity that caught many traders off guard. The price closed Friday at $2,909, up 1.8% on the week, despite Friday’s minor dip. This strong recovery confirms the bulls are not done yet. A clean breakout above $2,930 could ignite a surge toward $3,000—a level markets are fixated on with increasing conviction.
Physical Supply Is Drying Up: Gold Flows to New York Spark Shortage in London
A massive shift of physical gold from London to New York has upended the supply dynamic. In just January alone, 151 metric tons of gold were pulled from London vaults. In total, 12.2 million ounces were transferred to COMEX warehouses over the past two months, leaving the London market increasingly illiquid. Withdrawal wait times from the Bank of England’s vaults have stretched from a few days to nearly two months. The physical scarcity is no longer theoretical—it’s real, and it’s reshaping sentiment.
This isn't just logistical. Behind these transfers lies speculation about impending U.S. trade tariffs on metals and whispers of a Trump-led gold-backed financial framework. Whether those rumors are credible or not, the physical market has been spooked into action.
ETF Inflows, Chinese Buying and Central Bank Demand Create Perfect Storm
Gold-backed ETFs saw net inflows of 26.6 tonnes during the week ending February 28, marking five consecutive weeks of inflows. At the same time, China’s central bank raised its gold reserves for a fourth straight month in February, climbing from 73.45 to 73.61 million ounces. In dollar terms, China's holdings rose from $206.53 billion to $208.64 billion—small percentage-wise, but massive in signal.
This coordinated institutional interest has added hard support underneath XAU/USD, making selloffs shallow and short-lived.
U.S. Dollar Cracks Under Pressure, and Gold Smells Blood
The U.S. Dollar Index (DXY) just printed its largest weekly bearish candle in over two years. It dropped to a four-month low after February’s nonfarm payrolls came in at 151,000—missing expectations by 9,000. The unemployment rate ticked up to 4.1% from the expected 4.0%. Markets interpreted this as fuel for a Fed rate cut later this year. A weaker dollar directly benefits gold, and the price action reflected that—surging more than $100 from the pullback low at $2,832.
Jerome Powell’s comments reinforced the dovish shift, emphasizing caution in the face of ongoing policy changes. Markets are now pricing in rate cuts, while gold is already trading like they’ve happened.
Options Expiry Triggers Gold Manipulation—Then Comes the Rally
February futures expiry forced a temporary decline engineered by professional desks, pushing XAU/USD below $2,900 just in time to wipe out call options. But the minute the manipulation faded, gold snapped back sharply—up nearly $100 in days. This V-shaped recovery wasn’t retail-driven; it was institutional panic to cover shorts that got caught offside after the price bounce.
COT Data and Sentiment: Bearish Positioning, But No Exit Signal Yet
The most recent COT report shows commercial traders holding 288,100 net short contracts as of February 25. While that’s bearish, it's surprisingly restrained considering the $350 rally since December. Many of those shorts were likely trimmed during the plunge to $2,832, but current positioning still suggests that the large players are not yet ready to throw in the towel. The Sentiment Optix reading sits at 71—just under euphoric territory—indicating a market that’s bullish, but not yet maxed out.
Technical Levels: What Will It Take to Break $2,956 and Hit $3,000?
Price rejected twice near $2,955 in recent weeks. This level has now formed a short-term double top on the daily chart. Still, if XAU/USD can print a close above $2,930, the path to $2,956 and ultimately $3,000 is wide open. Support is strong between $2,865 and $2,890. Only a weekly close below $2,790 would challenge the current uptrend.
The weekly chart remains firmly bullish, with eight green weekly candles in the past 10 weeks. The daily stochastic indicators have reset from overbought conditions, giving bulls more room to run.
Why Seasonality Matters: Springtime Gold Rallies Are a Historical Pattern
Seasonal charts show that gold tends to perform best between mid-December and mid-May. This year is following the pattern perfectly. The rally that began at $2,585 in December shows no signs of weakening, and silver’s delayed reaction could be the second act. If silver breaks out above $30, it could lead gold higher in a classic tandem surge.
Tariffs, Trump, and the Fiscal Boom: Macro Tailwinds Keep Blowing
The Trump administration has unleashed a torrent of uncertainty. With 70 executive orders in his first month, many sectors are adjusting on the fly. While Trump’s gold audit initiative hasn’t been confirmed, the rumors alone are enough to make institutions hoard physical bullion. Meanwhile, Germany’s €1 trillion stimulus package has rattled bond markets, sent Bund yields up 24 basis points, and reinforced gold’s role as the last stable hedge in an unhinged macro environment.
Will Gold Break $3,000 Before May?
That’s the question now dominating the metal’s ecosystem. All conditions point toward a strong "yes." A supportive Fed, weakening dollar, record central bank buying, seasonal tailwinds, and a public increasingly skeptical of fiat currencies—each variable adds pressure. XAU/USD looks primed to explode once it cracks above $2,956.
Pullbacks are opportunities, not warning signs. With momentum firmly in gold’s favor, and the world turning back toward tangible assets, $3,020 is now a realistic near-term target. The larger target from the multi-year cup-and-handle pattern? $3,080.
