Following the Federal Reserve's (Fed) dovish pivot during December's meeting, the gold market got a powerful boost. The twin engines of expected interest rate cuts and broader monetary easing are now firmly in the driver's seat. Simultaneously, the path forward points to a continued climb in the coming days, even if there are a few short-term speed bumps along the way.
The regulator's latest session sent an unambiguous message: the era of cheap money is far from over, with markets now being able to bank on further borrowing cost reductions. This clear signal proved to be the catalyst that pulled the rug out from the US dollar and supercharged gold's appeal as a non-yielding asset. Although the central bank didn't pull the trigger on a new quantitative easing (QE) program right then and there, it left the door wide open to flood the system with liquidity if the economic outlook darkens. Such a lingering promise of support is a powerful, long-term tailwind for the metal.
On the technical front, a solid floor is forming. Options and futures traders are firmly anchored in the $3,981–$3,986 and $4,005 zones, spotlighting their robust appetite to buy the dip. Meanwhile, significant open interest in the options market whispers a story of confidence, revealing that many players are placing their bets on a more sustained rally from here.
The mood for gold is pretty sunny, with bullish sentiment holding strong. Investors are walking a tightrope of cautious optimism, keeping their eyes wide open for the next catalyst. Now that the Fed's move is in the rearview mirror, the market's attention is turning to a new focus: the upcoming wave of American economic data. The star witnesses will be new inflation and jobs numbers, either corroborating or challenging the case for the regulator's promised easing.
Looking ahead, gold is poised to ride its ascending channel higher next week. If US economic reports come in soft and the greenback's retreat deepens, the stage will be set for bullion to break decisively above the $4,230 resistance, potentially charting a course toward the $4,300 milestone.
The ultimate recommendation is to buy gold if the $4,230 level is broken. Lock in profits at $4,300. Place Stop Loss at $4,160.
Calculate your open position so that a potential loss (protected by a Stop Loss order) is limited to 1% of your deposit. If your account balance does not allow entering a position of this size, it is better to skip the trade and wait for other market signals that meet low-risk criteria.
This content is for informational purposes only and is not intended to be investing advice.
