- Gold forecast remains bullish above the $4,200 mark, supported by several macro variables.
- December Fed easing and geopolitics keep safe-haven flows to gold.
- Technically, the price looks to test the swing high near $4,300 ahead of all-time highs at $4,380.
Gold price stays supported near the $4,200 level despite bouts of volatility. The metal surged to 6-week highs near $4,265 before retreating to $4,200 area. A softer Dollar Index (DXY) slipped to the 99.00 area amid rising expectations of a December Fed rate cut. Markets are now pricing in 87% probability of a rate cut, dramatically rising from 31% during mid-November.
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US economic data is also pushing for safe-haven flows. The ISM Manufacturing PMI slid to 48.2 in November, marking a ninth straight month of contraction. Weaker data caps the dollar upside despite the US yields gaining mild traction.
Geopolitical risks also keep the gold prices underpinned. The US is set to start negotiations over the Russia-Ukraine conflict this week, while Venezuela’s tensions remain elevated after President Trump warned of airspace restrictions and potential escalations. The geopolitical backdrop remains supportive for gold, limiting the downside.
Gold’s strong start in December, following a solid 4-month streak and last week’s 3.75% rally, reflects the persistent appetite for safe-haven assets. The main debate now is whether the bullion would benefit from the Fed easing or rising JGB yields could limit the upside.
Meanwhile, the structural factors remain supportive as central bank buying, especially from China, and de-dollarization continue to keep medium-term flows into gold. However, any slowdown in PBoC purchases or easing geopolitical frictions could affect the gold’s lustre. Rising Japanese yields also pose a risk for gold’s rally that could unwind flows across leveraged positions.
Gold Key Events Ahead
Gold’s trajectory will be guided by incoming US data, including the ADP employment report, ISM Services PMI, and PCE inflation in the short term. The markets remain heavily positioned for a December Fed cut; hence, any upside surprise in data could spark volatility. For now, however, the bulls retain the upper hand above $4,200.
Gold Technical Forecast: Bullish Above $4,200
The gold 4-hour chart shows price sliding to the 20-period MA above the $4,200 area. The RSI has slumped from the overbought region towards 50.0, suggesting a near-term consolidation.
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The upside could stay capped by the recent swing high near $4,265. However, a clear breakout could aim for $4,300 ahead of all-time highs at $4,380. On the flip side, downside move could find a strong support near $4,200 ahead of a confluence of trendline and 50-period MA at $4,145.
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Saqib Iqbal
