JPMorgan forecasts that gold will form a potentially months-long wide trading range above the support level of $4,264-$4,381 and below the resistance level of $5,100-$5,150. The long-term theme of "currency depreciation" remains intact, and as long as the US Dollar Index stays below 100, a weak dollar environment will continue to support the long-term bullish outlook for precious metals and commodities.
The unilateral uptrend in precious metals has temporarily come to an end.
JPMorgan technical strategist Jason Hunter and his team released a report on Thursday stating that although the foundation of the long-term bull market trend remains solid, recent sharp volatility has prompted technical patterns to indicate that the market has officially entered a consolidation phase.
The bank expects that,$XAU/USD (XAUUSD.CFD)$The bank expects a wide-ranging consolidation zone potentially lasting several months to form above the support level of $4,264–$4,381 and below the resistance level of $5,100–$5,150.
The report also pointed out that,$USD (USDindex.FX)$The report also noted that fluctuations below the 100 threshold, along with the trend in the S&P 500/gold ratio, suggest that the long-term 'currency devaluation trade' is not over. The current consolidation in precious metals represents a pause within a bull market rather than a bearish reversal.
Gold consolidates in the short term, but the long-term bullish logic remains unchanged.
JPMorgan's technical team analyzed that the recent price performance of gold exhibits short-term 'eruptive' reversal characteristics, which typically signal the onset of a consolidation period. However, this does not signify the end of the long-term upward trend.
From a tactical perspective, gold prices will undergo a necessary consolidation period before attempting to break through the 5,100-point level.
Investors need to focus on key technical levels to define the range of fluctuations:
On the downside, the initial rebound in gold prices will be tested by intermediate support levels, particularly the 50-day moving average at the 4,500-point level and the pattern breakout zone in the 4,264-4,381 range corresponding to Q4 2025.
On the upside, upward momentum is expected to weaken around the 5,000-point level, with stronger resistance located in the 5,100-5,140 range.
The report emphasizes that, when comparing long-term price patterns and the end of a currency depreciation cycle akin to the late 1970s, the prolonged cycle of currency depreciation has not yet concluded. This indicates that the foundation for a bull market remains intact, with the current consolidation primarily serving as preparation for future movements.
Copper: Corrections Present Buying Opportunities
In comparison to precious metals, JPMorgan believes base metals will exhibit greater resilience. Despite LME copper prices showing signs of upward fatigue and forming a deceleration pattern after reaching the medium-term target range of 14,095-14,596, pro-cyclical rotation will provide underlying support.
Technically, as the market enters a consolidation phase, the first support level is expected around the 12,074-12,105 point region. A more critical medium-term support lies at the 11,100-11,200 points; as long as trading remains above this multi-year breakout zone, the long-term bullish trend will remain intact.
Notably, through regression analysis, the report highlights that the surge in copper prices has been partially driven by 'currency depreciation flows,' with implied global manufacturing PMI expectations (around 53) far exceeding actual readings (approximately 50.5). Although copper prices may slightly overestimate the strength of cyclical recovery, the integrity of the pro-cyclical trend suggests that pullbacks will attract substantial buying interest.
Macro Drivers: Weak Dollar Supports Long-Term Bullish Trends
The core support for the long-term bullish outlook on commodities continues to stem from the foreign exchange market. After attempting to break through the second-half 2025 support level in late January, the US Dollar Index experienced significant volatility and remains trapped within a clear range.
JPMorgan notes that the key factor is that the US Dollar Index has predominantly traded below the critical long-term inflection point of 100 over the past eight months.
As long as prices remain below this level, the market is prone to resuming the downtrend that began in early 2025. This weak dollar environment will continue to bolster the long-term bullish logic for precious metals and commodities.
Editor/Rice
