On Monday (September 9th), spot gold rebounded sharply after falling to $2485 per ounce at one point, and finally closed above $2500 at $2506.04 per ounce. FXStreet analyst Christian Borjon Valencia wrote an article analyzing the technical trend of gold prices.

Valencia pointed out that gold prices surged above $2500 per ounce on Monday, as traders prepared for the release of the US August inflation report and sought hints that the Federal Reserve would cut interest rates by 50 or 25 basis points. Gold traders overlooked the overall strength of the US dollar. The US dollar index, which measures the performance of the US dollar against six currencies, has risen by over 0.30%.

According to CME's "Federal Reserve Watch" tool, the probability of the Fed cutting interest rates by 25 basis points in September is 73%, while the probability of a 50 basis point rate cut is 27%.

At the end of the Asian market on Monday, spot gold fell to $2485.48 per ounce, hitting a intraday low. Subsequently, the gold price continued to rebound. As of Monday's close, spot gold rose $8.84, or 0.35%, to $2506.09 per ounce.

Analysts point out that the situation in the Middle East remains tense, providing momentum for a rebound in gold prices.

According to Agence France Presse, an Israeli airstrike in central Syria on September 8th resulted in at least 14 deaths. The Iranian Ministry of Foreign Affairs issued a statement on September 9th condemning the Israeli military for launching a "criminal attack" and calling on Israeli supporters to stop arming them.

Iranian Foreign Ministry spokesperson Nasir Karnani said at a press conference held in Tehran on September 9, "We strongly condemn the criminal attacks launched by the 'Zionist regime' on Syrian territory," and called on Israeli supporters to "stop supporting and arming it.

According to the Times of Israel citing Syrian media reports, Israel launched a series of attacks on multiple areas in central Syria on the night of August 8th, resulting in at least 14 deaths and 43 injuries.

According to Iranian media reports on September 8th local time, regarding the death of Hamas leader Haniya in an attack in Tehran, the commander of the Islamic Revolutionary Guard Corps, Hossein Salami, stated that Iran will make Israel punished for its wrongdoing. He reiterated that the way Iran takes retaliatory measures will be different.

Haniya was assassinated in Tehran, the capital of Iran, on July 31st. Hamas and Iran have determined that the assassination was carried out by Israel, and Iran has firmly stated that it will retaliate. Israel has neither admitted nor denied the assassination of Hania to this day.

How to trade gold?

Analyst Christian Borjon Valencia pointed out that gold prices have resumed an upward trend and surpassed $2500 per ounce, but they are still below $2510 per ounce, and buyers seem to have failed to gather momentum.

The momentum is still bullish, but gold may consolidate in the short term before resuming an upward trend or turning downwards. The Relative Strength Index (RSI) is almost unchanged, indicating that neither the buyer nor the seller has control over the situation.

Valencia said that if the gold price rises above its high of $2531 per ounce so far this year, it may push it to challenge $2550 per ounce. If we break through the latter, the next target will be the psychological barrier of $2600 per ounce.

(Daily chart of spot gold)

On the other hand, Valencia added that if the gold price falls below $2500 per ounce, the next support level will be the August 22 low of $2470 per ounce.

If the gold price falls below $2470 per ounce, the next support area will be at the confluence of the May 20th high (which has transformed into a support level) and the 50 day simple moving average (SMA), between $2450-2440 per ounce.