Both fundamental and technical indicators continue to support gold prices in the coming period. The key fundamentals that previously boosted gold remain in place, including:
- A rate-cut environment in the United States, where markets are pricing in a 25-basis-point cut with a probability exceeding 85% at the Federal Reserve meeting on December 10. More importantly, expectations that Kevin Hassett, the White House economic adviser, will replace Jerome Powell in May next year could lead to significant rate cuts, potentially pushing real interest rates into negative territory, which would support gold.
- Persistent geopolitical tensions between Russia and Ukraine despite ongoing negotiations, along with rising tensions between the United States and Venezuela amid cautious anticipation of potential U.S. action inside Venezuela and increasing frictions between Japan and China.
- Continued gold purchases by central banks.
- Inflationary risks, as inflation remains near 3%, higher than the Federal Reserve’s 2% target.
Despite these supportive factors, caution is needed, especially regarding the December 10 Federal Reserve meeting, which is marked by a sharp division among members: some may vote to keep rates unchanged; others may support a 25-basis-point cut, and some may even lean toward a 50-basis-point cut. If rates are cut by 25 basis points as widely expected, attention will shift to Powell’s tone, which may be cautious — a so-called “hawkish cut.” This would refocus attention on inflation risks, the potential for inflation to rise again due to tariffs, and the Fed’s continued commitment to bringing inflation back to 2%.
Under this scenario, gold may witness significant volatility, possibly pulling back toward the 4,000 or 3,900-dollar levels in the short term. Over the medium and long term, however, prices could reach 4,800 or even 5,000 dollars next year.
Technically, the upward trend remains intact, with the 20-, 50-, and 200-day moving averages aligned in a bullish formation, as the 20-day average remains above the 50-day, which in turn remains above the 200-day. The Relative Strength Index (RSI) currently stands at 63, reflecting continued positive momentum for gold.
Please note that this analysis is provided for informational purposes only and should not be considered as investment advice. All trading involves risk.
