Has gold reached a short-term peak?

As of September 15, 2025, gold has rapidly risen to $3,674 per ounce, breaking through the inflation-adjusted peak of 1980 for the first time. The main reasons are the weak U.S. employment data, market concerns about the fundamentals of the U.S. economy, trading on the "low growth + high inflation" stagflation logic, and increased expectations for the Federal Reserve to cut interest rates, compounded by Trump's frequent pressure on the Federal Reserve for personnel changes, leading to market doubts about the independence of the Federal Reserve's policies.

1. We believe that while the logic of a long-term bull market in gold still exists, there may be short-term pullback risks. From a trading indicator perspective:

1. Gold is at an overbought level, and volatility may increase. The current 14-day RSI for gold has reached 78, which is overbought to a level above 90% for nearly 10 years, indicating that some profit-taking may occur. More importantly, compared to the more extreme RSI, global ETF flows, spot, and futures positions are not as heated. Therefore, we are concerned that gold trading may be overheated in the short term, posing a pullback risk.

2. The fund flows of gold ETFs have not formed a consistent trend. From a regional perspective, in the past month, U.S. gold ETFs have seen significant inflows, while China has experienced outflows. The top three U.S. gold ETFs have collectively seen inflows of about $36.7 billion, while two Chinese gold ETFs have seen outflows exceeding $2.65 billion, making it the only region in the world with significant reductions. From the behavior of institutions and retail investors, retail investors are marginally increasing their gold holdings while institutions are marginally reducing their gold positions.

3. Spot gold squeeze is limited. Gold inventories have not been significantly pushed up, and there has not been a notable increase in demand for physical gold delivery, suggesting that the degree of spot squeeze is relatively limited in the short term, and bullish sentiment in gold is not extreme; additionally, gold leasing rates for various maturities have fallen below 0, indicating that demand for physical gold is not tight, and there has not been a significant increase in delivery demand, meaning that gold bulls are not overly strong. Moreover, the inversion between short and long ends is not obvious; although it is still in a spot premium state, the degree is far less than at the beginning of this year.

4. Comex speculative net long positions in gold have declined. According to the U.S. Commodity Futures Trading Commission (CFTC), speculative net long positions in gold have rapidly decreased, indicating a weakening bullish sentiment among institutions regarding gold

5. The market sentiment in China is not "booming" enough. In terms of price, both Comex gold and London gold spot have reached historical highs, but Shanghai gold has not yet broken through its previous high; in terms of inventory, compared to overseas gold inventories, the position held by the Shanghai Gold Exchange has marginally declined. In this round of gold price increase, the sentiment in China is not as high as in other regions globally.

II. Will the US dollar definitely weaken?

1. The market has fully priced in three rate cuts, and there is no further room for rate cuts this year. Due to weak employment, the market has a pessimistic view of the US economy; however, leading indicators show that there are signs of "recovery" in the US economy. If the economy exceeds expectations, the rate cut expectations will further converge.

2. Rate cuts do not necessarily lead to a significant weakening of the US dollar. From a historical perspective, preemptive rate cuts have led to an average decline of the dollar one week later, with a relatively large drop (-0.91%), but the decline narrows and turns into an increase within a month, with average increases of 0.84% and 2.02% over the next three and six months, respectively.

3. This round of preemptive rate cuts is beneficial for improving the US economy. With the implementation of rate cuts, interest rates decrease, which is beneficial for improving corporate and real estate investment, boosting the economy. According to the Atlanta Federal Reserve's forecast, the actual annualized GDP growth rate for Q3 2025 is expected to be 3%, with actual personal consumption expenditures and actual private domestic investment expected to increase marginally.

4. The relative strength of the euro may be temporary. First, the European Central Bank has limited room for further monetary easing this year, while the US has more room for rate cuts. Second, the marginal growth expectations for the US economy are better than those for Europe. If the resilience of the US economy is better than that of non-US countries, we expect the pressure for dollar depreciation to ease.

Author of this article: Chen Meng and Ge Xiaoyuan from Dongxing Securities, Source: Dongxing Securities Original Title: “【Dongxing Securities Strategy Commentary】Gold, Has It Topped in the Short Term?”

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