Gold (XAU/USD) is flashing signs of a potential long squeeze as key technical levels come into focus. After reaching a fresh all-time high of $3,057 this week, the price has slipped nearly 0.50% to trade around $3,043 at press time.
Despite some short-term selling pressure, the broader outlook for gold remains bullish, supported by macroeconomic uncertainty and heightened geopolitical tensions.
What’s driving gold’s bullish case?
The recent surge in gold was largely driven by the Federal Reserve’s latest policy decision, where the central bank kept interest rates unchanged in the 4.25% to 4.50% range.
Picks for you
Fed Chairman Jerome Powell acknowledged that while tariffs may temporarily delay progress toward bringing inflation back to target, the central bank still expects to cut interest rates twice later this year. The Fed also called for higher inflation and lower economic growth.
Geopolitical tensions are also adding to gold’s appeal. Israeli airstrikes intensify across Gaza as the nation signals the possibility of a renewed ground offensive. In Turkey, mass protests erupted after the detention of Istanbul mayor Ekrem Imamoglu, further destabilizing the region.
Investor appetite for gold has also been reflected in strong ETF flows. According to the World Gold Council, physically backed gold ETFs attracted $9.4 billion in inflows in February, marking the highest monthly figure since March 2022, with analysts anticipating gold-backed ETF investment trusts to see ample scope for fresh inflows.
Technical analysis: Is a long squeeze looming?
Technically, gold is holding onto its bullish structure but is showing signs of short-term weakness. According to analysis from RLinda, the metal is retesting the wedge support, increasing the risk of a potential breakdown and long squeeze before the next leg higher.
If the level at $3,038 fails to hold, gold may slide further toward the liquidity zone between $3,028 and $3,024, where fresh buying interest could emerge. The U.S. dollar’s local correction ahead of economic data also added temporary pressure to gold prices.
Resistance levels are currently seen at $3,046, $3,051, and $3,056, while support is identified at $3,038, $3,030, and $3,024.
A decisive bounce from $3,038 and consolidation above $3,044 would likely negate the risk of a deeper pullback, allowing the metal to resume its bullish trajectory without significant downside. However, traders should remain alert to short-term volatility, with price action around these key levels likely to determine the next move.
Featured image via Shutterstock
