Gold bulls are steadily positioning themselves, anticipating an 80% chance of a December rate cut, as they await the next data release.
2025-11-25 19:59:00
Tuesday, November 25th. Recently, with market expectations for a Federal Reserve rate cut in December rising significantly, the US dollar has weakened in the short term. Geopolitical tensions have escalated in Ukraine and the Middle East, increasing the weight of risk aversion and interest rate expectations in global asset pricing. As an important safe-haven asset and inflation hedge, spot gold has once again taken center stage in trading. Spot gold prices are currently fluctuating around $4130 per ounce during the European session, near a relatively high level for the year. Understanding the underlying logic of this round of gold price increases, and the implications of macroeconomic and technical signals for future price movements, has become a core issue that cannot be avoided when observing the commodity market.
The recent strength in spot gold prices stems primarily from a significant correction in interest rate expectations. Previously, the Federal Reserve's policy of maintaining higher interest rates for an extended period pushed real interest rates and the dollar higher, exerting temporary downward pressure on precious metals. Recently, several Fed officials have publicly signaled a dovish stance, emphasizing that current interest rates may be "slightly too tight," and that monetary policy has room for adjustment given the cooling job market and inflation moving towards the target range. This statement has been interpreted by the market as a shift in policy stance from "continued tightening" to "approaching an inflection point." The probability of a December rate cut implied by federal funds futures and interest rate swaps has risen to approximately 80%, indicating a clear downward shift in interest rate expectations.
Changes in interest rate expectations directly impact the bond yield curve. A decline in nominal yields coupled with stabilizing inflation expectations has led to a pullback in real interest rates from their highs, easing the downward pressure on non-coupon assets. For spot gold, the cost of holding it is reflected at the macro level in its comparison with safe interest rates, particularly long-term Treasury yields. Currently, as the 10-year US Treasury yield has fallen from its previous high, long-term funds' willingness to allocate to gold has marginally improved, and some funds that previously flowed into money market funds and short-term bonds are beginning to reassess the allocation value of precious metal assets.
Geopolitical risks are another important factor driving the revaluation of gold's safe-haven appeal in this round of market activity. The conflict in Ukraine continues to show signs of escalation, with Russian attacks on Kyiv and other regions raising concerns about a prolonged crisis. Ceasefire arrangements in the Middle East have repeatedly faltered, with localized conflicts and unforeseen events remaining frequent. Issues such as oil supply security and energy transportation routes continue to influence risk appetite. When assessing global growth prospects and risk structures, traders are not only focusing on economic data itself but also paying closer attention to the tail risks of "low-probability but high-impact" events. In this environment, the strategic holding tendency for safe-haven assets such as gold has strengthened.
Recent market activity shows that while spot gold has been trending upwards with fluctuations, its trading structure exhibits a certain degree of divergence between short-term and long-term funds. On the one hand, some short-term funds are frequently trading within intraday ranges, focusing on macroeconomic data and official speeches, with prices showing high sensitivity to minor adjustments in interest rate expectations and geopolitical news. On the other hand, medium- and long-term asset allocation institutions are more concerned with the inflation center, the path of real interest rates, and the evolution of the global geopolitical landscape, showing a higher tolerance for short-term fluctuations and placing greater emphasis on gold's risk hedging and diversification functions in their asset portfolios. As a result, this diversified participant structure allows gold prices to stabilize relatively quickly after rapid corrections, limiting the sustainability of trend-based pullbacks.
The core logic for spot gold remains centered on "expectations of an interest rate inflection point + geopolitical risk premium." Regarding interest rates, the market will continue to monitor key US employment, inflation, and consumption data in the coming period to verify whether the Federal Reserve has more room to initiate interest rate cuts in December or later. If the data is unexpectedly strong again, forcing the Fed to postpone its easing measures, real interest rates may rise temporarily, putting some pressure on gold. Conversely, if the data continues to show a moderate slowdown in economic growth and inflation moving closer to the target range, existing expectations of interest rate cuts are likely to be consolidated or even strengthened, and a downward shift in the interest rate path will further enhance the attractiveness of gold as an investment.
From a daily chart perspective, spot gold has been oscillating upwards along the rising trendline since near its previous lows. Currently, the price is around $4130 per ounce, still trading above the purple rising support line. The $4000 area and the previous low near $3886 form a key support zone for this phase. The previous high of $4245 and the even higher level of $4381 constitute two resistance levels in the near term.
In terms of indicators, the MACD histogram is shortening and the divergence is converging towards the signal line, reflecting weakening bearish momentum and a continuation of the recovery. The Relative Strength Index (RSI) has rebounded from its previous low to near the midline, indicating that the balance between bulls and bears is gradually shifting, but remains slightly bullish. Overall, the price is in a high-level consolidation phase within an upward channel. The performance around the trendline and the $4,000 level will be a strong indicator of the future evolution of bullish and bearish forces. Short-term fluctuations are likely to continue to revolve around the aforementioned support and resistance levels.
The recent strength in spot gold prices stems primarily from a significant correction in interest rate expectations. Previously, the Federal Reserve's policy of maintaining higher interest rates for an extended period pushed real interest rates and the dollar higher, exerting temporary downward pressure on precious metals. Recently, several Fed officials have publicly signaled a dovish stance, emphasizing that current interest rates may be "slightly too tight," and that monetary policy has room for adjustment given the cooling job market and inflation moving towards the target range. This statement has been interpreted by the market as a shift in policy stance from "continued tightening" to "approaching an inflection point." The probability of a December rate cut implied by federal funds futures and interest rate swaps has risen to approximately 80%, indicating a clear downward shift in interest rate expectations.
Changes in interest rate expectations directly impact the bond yield curve. A decline in nominal yields coupled with stabilizing inflation expectations has led to a pullback in real interest rates from their highs, easing the downward pressure on non-coupon assets. For spot gold, the cost of holding it is reflected at the macro level in its comparison with safe interest rates, particularly long-term Treasury yields. Currently, as the 10-year US Treasury yield has fallen from its previous high, long-term funds' willingness to allocate to gold has marginally improved, and some funds that previously flowed into money market funds and short-term bonds are beginning to reassess the allocation value of precious metal assets.
Geopolitical risks are another important factor driving the revaluation of gold's safe-haven appeal in this round of market activity. The conflict in Ukraine continues to show signs of escalation, with Russian attacks on Kyiv and other regions raising concerns about a prolonged crisis. Ceasefire arrangements in the Middle East have repeatedly faltered, with localized conflicts and unforeseen events remaining frequent. Issues such as oil supply security and energy transportation routes continue to influence risk appetite. When assessing global growth prospects and risk structures, traders are not only focusing on economic data itself but also paying closer attention to the tail risks of "low-probability but high-impact" events. In this environment, the strategic holding tendency for safe-haven assets such as gold has strengthened.
Recent market activity shows that while spot gold has been trending upwards with fluctuations, its trading structure exhibits a certain degree of divergence between short-term and long-term funds. On the one hand, some short-term funds are frequently trading within intraday ranges, focusing on macroeconomic data and official speeches, with prices showing high sensitivity to minor adjustments in interest rate expectations and geopolitical news. On the other hand, medium- and long-term asset allocation institutions are more concerned with the inflation center, the path of real interest rates, and the evolution of the global geopolitical landscape, showing a higher tolerance for short-term fluctuations and placing greater emphasis on gold's risk hedging and diversification functions in their asset portfolios. As a result, this diversified participant structure allows gold prices to stabilize relatively quickly after rapid corrections, limiting the sustainability of trend-based pullbacks.
The core logic for spot gold remains centered on "expectations of an interest rate inflection point + geopolitical risk premium." Regarding interest rates, the market will continue to monitor key US employment, inflation, and consumption data in the coming period to verify whether the Federal Reserve has more room to initiate interest rate cuts in December or later. If the data is unexpectedly strong again, forcing the Fed to postpone its easing measures, real interest rates may rise temporarily, putting some pressure on gold. Conversely, if the data continues to show a moderate slowdown in economic growth and inflation moving closer to the target range, existing expectations of interest rate cuts are likely to be consolidated or even strengthened, and a downward shift in the interest rate path will further enhance the attractiveness of gold as an investment.
Technical aspects
From a daily chart perspective, spot gold has been oscillating upwards along the rising trendline since near its previous lows. Currently, the price is around $4130 per ounce, still trading above the purple rising support line. The $4000 area and the previous low near $3886 form a key support zone for this phase. The previous high of $4245 and the even higher level of $4381 constitute two resistance levels in the near term.
In terms of indicators, the MACD histogram is shortening and the divergence is converging towards the signal line, reflecting weakening bearish momentum and a continuation of the recovery. The Relative Strength Index (RSI) has rebounded from its previous low to near the midline, indicating that the balance between bulls and bears is gradually shifting, but remains slightly bullish. Overall, the price is in a high-level consolidation phase within an upward channel. The performance around the trendline and the $4,000 level will be a strong indicator of the future evolution of bullish and bearish forces. Short-term fluctuations are likely to continue to revolve around the aforementioned support and resistance levels.
- 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.
