Gold strengthens on China weakness, trade tensions, and dovish Fed signals

Gold (XAUUSD) continues to trade with strength, as persistent geopolitical and economic risks support safe-haven demand. Weak economic data from China, ongoing U.S.-China trade tensions, and growing expectations of a Federal Reserve rate cut have all supported gold’s appeal. At the same time, technical indicators confirm a strong bullish trend. A breakout above key resistance has reinforced the positive outlook, positioning gold for further upside.

Gold benefits from China’s economic slowdown and softer Fed outlook

Gold continues to find support as economic data highlights growing global weakness. The latest economic data from China has deepened global concerns about growth. Industrial Output rose just 5.2% in August, slowing from 5.7% in July. Retail Sales also came in weaker, increasing only 3.4% compared to 3.7% the month before. As a result, soft economic readings have raised the likelihood of further policy support from China. That support may boost market liquidity and strengthen gold’s appeal.

U.S.-China negotiations in Madrid have seen minimal progress, adding another layer of concern to the markets. Key issues such as TikTok, digital trade, and broader economic relations remain unresolved. Looking ahead, talks are expected to continue through midweek. However, the absence of meaningful progress has so far kept markets cautious, supporting gold.

Meanwhile, the upcoming Fed policy decision is drawing significant market attention. A 25-basis-point rate cut is widely anticipated at the upcoming policy meeting. However, increasing expectations for deeper rate cuts and continued easing have strengthened the outlook for a softer policy direction. With interest rates potentially heading lower, the environment remains favourable for gold. Historically, gold gains value in low-rate settings, especially during times of economic stress.

Gold breaks channel resistance with momentum toward $4,000

The gold chart below shows a clear ascending channel, marked by consistently higher highs and higher lows that confirm a strong uptrend. The lower boundary of the channel acted as a reliable support zone around the $3,250–$3,300 range. After a brief period of consolidation in August, gold held firm at this base and surged higher. A rounded bottom pattern developed just above the support line, indicating solid accumulation and the potential for a breakout.

By early September, gold decisively broke above the channel’s upper boundary near $3,450, signalling a strong bullish continuation. This breakout was clean, backed by strong momentum, and marked a meaningful shift in technical structure. As a result, the former resistance zone, marked by earlier highs, has now turned into a support level. Following the breakout, price action extended sharply, pushing above $3,630. Importantly, this move aligns with a broader long-term resistance trendline. This area has now become a key zone that could open the path toward the $4,000 level.

In summary, the breakout and consolidation highlight the persistent strength of the market. Hence, it confirms the continuation of the bullish trend. As long as gold stays above $3,520, the breakout remains confirmed and the bullish setup remains intact. Ongoing short-term consolidation above this level appears constructive and may serve as a launching pad for the next leg higher.

Gold outlook: Bullish structure remains intact above key support

Gold prices remain steady as global uncertainty grows due to weak Chinese figures, unresolved trade talks, and a dovish Federal Reserve outlook. The technical breakout above key resistance reinforces the bullish outlook, with strong momentum and solid support now in place. As long as prices hold above $3,520, gold is likely to maintain its upward path, with the $4,000 level emerging as the next primary target.

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