Gold "Short Squeeze" Enters Phase Two: Macro Signals and Technicals Resonate, $4,500 Becomes Key Resistance

The "short squeeze" in the gold market is evolving into a more sustainable upward structure. The synchronous resonance of macro signals and technical indicators is providing support for the next phase of gold price increases, while $4,500 has become a key resistance level closely watched by the market.

On Tuesday, according to a comprehensive analysis by zerohedge, gold recorded another strong bullish candlestick after a recent slight flag consolidation, with the 21-day and 50-day moving averages forming a Golden Cross, clarifying the technical pattern. Meanwhile, gold's trend is almost perfectly synchronized with Federal Reserve interest rate expectations and has resumed tracking movements in Japan's ultra-long-end interest rates, indicating a return of macro drivers.

Positive signals have also emerged in capital flows. According to Bank of America data, gold fund inflows hit their largest weekly record since January this year, with Western active longs beginning to return to the market. Goldman Sachs analyst Ankush Gupta pointed out that this round of metal rallies is clearly led by China, with participation in Asian exchanges jumping from single-digit percentiles to around 50%, forcing shorts to cover and pushing gold prices into a rare, nearly straight-line surge.

Return of Macro Signals: Dual Resonance of Japanese Bonds and Fed Pricing

Gold is reacting to macro variables again, a shift viewed by the market as an important signal that the market trend has entered a new phase.

Gold and Federal Reserve interest rate pricing are currently moving in almost perfect lockstep. According to Goldman Sachs data, the correlation between the two has reached a near-perfect synchronization level. At the same time, gold has once again begun to track changes in Japan's ultra-long-end interest rates—a relationship that had previously decoupled during the earlier gold frenzy but has now been re-established, implying that the market is repositioning gold as a core hedging tool against global macro risks.

Analysts describe gold as the only true "all-asset hedging tool." Against the backdrop of continuous fluctuations in global interest rate expectations and unresolved pressure in the Japanese bond market, gold's renewed sensitivity to macro signals provides fundamental support for further upside.

Technical Picture Clarifies: Bullish Pattern Established After Flag Consolidation

From a technical perspective, after experiencing several days of slight flag consolidation, gold has again recorded strong bullish candlesticks, with the pattern possessing the conditions to initiate the next phase of rise.

Notably, the 21-day moving average and the 50-day moving average have formed a Golden Cross, a medium-term technical signal typically regarded as an important confirmation of trend continuation. According to LSEG Workspace data, if the gold price can close slightly higher than current levels, it could trigger a new round of short squeezes.

Analysis points out that the overall landscape remains bullish, with macro and technical factors resonating once again, consistent with the logic for being bullish on gold in early August.

Chinese Capital Leads This Rally, Western Bulls Begin to Return

The structural characteristics of this round of gold rallies are worth noting. Goldman Sachs' Ankush Gupta pointed out that there is clear evidence showing this metal rally is led by Chinese capital—participation in Asian exchanges has surged significantly from previous single-digit percentiles to around 50%. This influx of capital has forced large-scale short covering, driving gold prices into an unusually smooth, straight-line upward trend.

Currently, Western active longs are also gradually returning to the market, further improving capital flows. According to Bank of America data, gold fund inflows have hit their largest weekly record since January this year, indicating that market sentiment is spreading to a broader range of participants.

Gupta also noted that current positions have not yet reached overly crowded levels, but the initial "spring compression" phase may have largely been released, meaning the market will face more two-way risks going forward.

$4,500 Becomes Key Resistance, Options Strategies More Cost-Effective

As the gold price approaches key technical levels, changes in the risk-reward ratio are influencing market participation methods.

Goldman Sachs' Ankush Gupta explicitly identifies $4,500 as a key resistance level, believing that profit-taking pressure may emerge near this price. For investors still wishing to participate in the upward trend, Gupta prefers expressing bullish views through call spreads and digital knock-out (KO) structures, considering these structures simpler and more efficient against the backdrop of changing risk-reward ratios and the repricing of volatility skew.

It is worth noting that despite the recent sharp rise in gold prices, implied volatility for gold has remained relatively stable, keeping the cost of participating in potential upside via options reasonable. Analysts believe that with volatility at current levels, call spreads still hold allocation value.

Furthermore, Commodity Trading Advisors (CTAs) generally held short positions during this short squeeze. If gold prices continue to rise, this capital will still face pressure to buy forcibly, but analysts warn that convexity effects are no longer one-sided at this stage.