Is the pullback in gold prices a sign of impending doom or a bull trap?
2025-11-25 17:26:03
On Tuesday (November 25), during the Asian and European sessions, spot gold experienced a slight rise followed by a fall and then a rebound. Although gold briefly rose to a more than one-week high of about 0.6% during the day, it failed to maintain the upward momentum effectively, and the upward trend lacked continuity. It once fell to -0.6% during the session, and is currently trading around -0.2% near $4125.
From a market perspective, US stocks generally rose. Before the release of the Fed's policy-sensitive data, this signal of rising risk appetite directly weakened the demand for gold as a safe haven. However, the recent stagnation of the US dollar has brought new benefits to gold prices.
Meanwhile, rising expectations of a December rate cut by the Federal Reserve and continued geopolitical risk exposure provide underlying support for gold, and the bullish trend remains unshaken. In addition, the geopolitical premium brought about by the escalation of the Russia-Ukraine conflict and new variables in the Middle East situation remains an important point of contention.
It should be noted that recent statements from Federal Reserve officials have been divergent, and the market has priced in a December rate cut at a high level. This has made dollar bulls hesitant to increase their positions, as they are wary of the risk of a pullback triggered by a reversal in policy expectations.
This caused the US dollar index to stagnate and pull back slightly. For gold, a non-interest-bearing asset, this change in the US dollar holding structure will continue to provide support.
New York Fed President John Williams released a key dovish signal last Friday, making it clear that "short-term rate cuts will not impact the inflation target," and Fed Governor Waller further reinforced this expectation on Monday, pointing out that "the current weakness in the labor market has met the conditions for a 25 basis point rate cut in December."
Boston Federal Reserve President Susan Collins told reporters on the sidelines of an economic conference on Saturday, "The current overall financial environment is more of a tailwind than a headwind, and in this environment, there is no urgency for me to further ease monetary policy."
However, on Monday, San Francisco Fed President Daly made similar dovish remarks in an interview, further increasing the probability of a rate cut. Later, Fed Governor Waller stated that the US labor market was weak and continuing to decline, and inflation was expected to slow, suggesting these factors were sufficient to support a 25 basis point rate cut at the December meeting.
According to the CME FedWatch tool, the probability of a 25 basis point cut in the federal funds rate to the 3.50%-3.75% range in December has climbed to 80%. This pricing logic limits the continued upward momentum of the dollar index after last week's breakout, while providing interest rate support for gold, highlighting the allocation value of non-interest-bearing assets under the expectation of easing.
Geopolitical risks disrupt the market – On the morning of Tuesday, November 25, 2025, Russia launched multiple precision strikes against Kyiv, the capital of Ukraine, targeting residential areas and core energy facilities.
Looking back at the weekend developments, representatives from the US and Ukraine have begun consultations in Switzerland on a US-led ceasefire framework, attempting to find a solution to the conflict that has lasted for nearly four years.
The White House is sending conflicting signals: President Donald Trump is optimistic about reaching an agreement, but at the same time emphasizes that "progress is highly uncertain";
Ukrainian officials revealed that the peace plan proposed by the United States included 19 clauses and did not impose any hard constraints on the size of the Ukrainian military.
Judging from the probability of the agreement being implemented, Russia's acceptance of the above-mentioned clauses is questionable, and geopolitical negotiations remain deadlocked.
Furthermore, the latest data from the Gaza government's media office shows that Israel has violated the US-brokered ceasefire agreement 497 times in the past 44 days, and the fluctuating situation in the Middle East has further strengthened gold's safe-haven properties.
The market's focus is now entirely on Tuesday's US economic data matrix—the delayed Producer Price Index (PPI) and retail sales data will directly reflect inflation and consumer resilience, while the pending home sales index and Richmond manufacturing index are linked to the real estate and industrial sectors.
Meanwhile, the market will closely monitor various data and focus on the Federal Reserve's Beige Book (Summary of Current Economic Conditions) released on Wednesday to glean policy clues.
The better-than-expected performance of these data will directly guide the short-term trend of the US dollar, thereby creating intraday trading opportunities for the gold/US dollar currency pair.
This Thursday, due to the Thanksgiving holiday, the trading week is shortened, with both the bond and stock markets closed that day and closing early the following day. As a result, Wednesday may see a tightening of liquidity.
The U.S. federal government will not release a separate inflation report for October, meaning that when Federal Reserve officials hold their December policy meeting, the latest employment and inflation data they have on hand will still be at the September level.
Spot gold rose to the middle line of the channel but encountered resistance. The area around 4100 is the recent support level, which is the intersection of the lower line of the ascending channel and the 5-day moving average. It is expected to continue to move upward along the ascending channel before the signing of the agreement between Russia and Ukraine on November 27.
(Spot gold daily chart)
As mentioned in yesterday's article, be wary of a breakout near 4080. Indeed, the price rose after the breakout and reached the measured target of 4136.
(Spot gold intraday chart, source: EasyForex)
At 17:21 Beijing time, spot gold was trading at $4128.23 per ounce.
From a market perspective, US stocks generally rose. Before the release of the Fed's policy-sensitive data, this signal of rising risk appetite directly weakened the demand for gold as a safe haven. However, the recent stagnation of the US dollar has brought new benefits to gold prices.
Meanwhile, rising expectations of a December rate cut by the Federal Reserve and continued geopolitical risk exposure provide underlying support for gold, and the bullish trend remains unshaken. In addition, the geopolitical premium brought about by the escalation of the Russia-Ukraine conflict and new variables in the Middle East situation remains an important point of contention.
US dollar positioning structure supports gold prices.
It should be noted that recent statements from Federal Reserve officials have been divergent, and the market has priced in a December rate cut at a high level. This has made dollar bulls hesitant to increase their positions, as they are wary of the risk of a pullback triggered by a reversal in policy expectations.
This caused the US dollar index to stagnate and pull back slightly. For gold, a non-interest-bearing asset, this change in the US dollar holding structure will continue to provide support.
The Fed's dovish signals prompted interest rate cuts, supporting gold prices.
New York Fed President John Williams released a key dovish signal last Friday, making it clear that "short-term rate cuts will not impact the inflation target," and Fed Governor Waller further reinforced this expectation on Monday, pointing out that "the current weakness in the labor market has met the conditions for a 25 basis point rate cut in December."
Boston Federal Reserve President Susan Collins told reporters on the sidelines of an economic conference on Saturday, "The current overall financial environment is more of a tailwind than a headwind, and in this environment, there is no urgency for me to further ease monetary policy."
However, on Monday, San Francisco Fed President Daly made similar dovish remarks in an interview, further increasing the probability of a rate cut. Later, Fed Governor Waller stated that the US labor market was weak and continuing to decline, and inflation was expected to slow, suggesting these factors were sufficient to support a 25 basis point rate cut at the December meeting.
According to the CME FedWatch tool, the probability of a 25 basis point cut in the federal funds rate to the 3.50%-3.75% range in December has climbed to 80%. This pricing logic limits the continued upward momentum of the dollar index after last week's breakout, while providing interest rate support for gold, highlighting the allocation value of non-interest-bearing assets under the expectation of easing.
The fluctuating situations in Russia-Ukraine and the Middle East have further strengthened gold's safe-haven appeal.
Geopolitical risks disrupt the market – On the morning of Tuesday, November 25, 2025, Russia launched multiple precision strikes against Kyiv, the capital of Ukraine, targeting residential areas and core energy facilities.
Looking back at the weekend developments, representatives from the US and Ukraine have begun consultations in Switzerland on a US-led ceasefire framework, attempting to find a solution to the conflict that has lasted for nearly four years.
The White House is sending conflicting signals: President Donald Trump is optimistic about reaching an agreement, but at the same time emphasizes that "progress is highly uncertain";
Ukrainian officials revealed that the peace plan proposed by the United States included 19 clauses and did not impose any hard constraints on the size of the Ukrainian military.
Judging from the probability of the agreement being implemented, Russia's acceptance of the above-mentioned clauses is questionable, and geopolitical negotiations remain deadlocked.
Furthermore, the latest data from the Gaza government's media office shows that Israel has violated the US-brokered ceasefire agreement 497 times in the past 44 days, and the fluctuating situation in the Middle East has further strengthened gold's safe-haven properties.
Market Focus: US Economic Data Matrix Becomes Key Short-Term Variable
The market's focus is now entirely on Tuesday's US economic data matrix—the delayed Producer Price Index (PPI) and retail sales data will directly reflect inflation and consumer resilience, while the pending home sales index and Richmond manufacturing index are linked to the real estate and industrial sectors.
Meanwhile, the market will closely monitor various data and focus on the Federal Reserve's Beige Book (Summary of Current Economic Conditions) released on Wednesday to glean policy clues.
The better-than-expected performance of these data will directly guide the short-term trend of the US dollar, thereby creating intraday trading opportunities for the gold/US dollar currency pair.
This Thursday, due to the Thanksgiving holiday, the trading week is shortened, with both the bond and stock markets closed that day and closing early the following day. As a result, Wednesday may see a tightening of liquidity.
The U.S. federal government will not release a separate inflation report for October, meaning that when Federal Reserve officials hold their December policy meeting, the latest employment and inflation data they have on hand will still be at the September level.
Technical Analysis:
Spot gold rose to the middle line of the channel but encountered resistance. The area around 4100 is the recent support level, which is the intersection of the lower line of the ascending channel and the 5-day moving average. It is expected to continue to move upward along the ascending channel before the signing of the agreement between Russia and Ukraine on November 27.
(Spot gold daily chart)
As mentioned in yesterday's article, be wary of a breakout near 4080. Indeed, the price rose after the breakout and reached the measured target of 4136.
(Spot gold intraday chart, source: EasyForex)
At 17:21 Beijing time, spot gold was trading at $4128.23 per ounce.
- Risk Warning and Disclaimer
- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
