Gold prices, after reaching a high of $4,247, are in a correction phase... The strength of the dollar and the preference for risk assets are controlling the upward trend

Technical resistance is thickening, leading to short-term sideways movement… Buying points are forming at each decline segment

Mixed signals from the Federal Reserve and geopolitical risks create uncertainty in the gold market direction

The international gold(XAU/USD) market has entered a correction phase after reaching a peak of sharp decline. During Thursday’s Asian trading hours, spot gold hit $4,247 per ounce, setting a weekly high, but subsequently retreated due to a technical rebound in the dollar. The Fed’s news of interest rate cuts was a positive signal, but as the dollar rebounded from its lows after late October, profit-taking in the gold market began to surge.

Technical aspect: Volatility is expanding at the boundary between resistance and support

Chart-wise, gold has been struggling within the upper boundary of the box range formed over the past two weeks, between $4,245 and $4,250. This level acts as a short-term resistance, and a successful breakout could lead to an extended rally toward $4,278 and possibly up to $4,300.

Conversely, in a scenario of intensified correction, the $4,170–$4,165 range is expected to serve as the first buying opportunity. If this zone is broken, the $4,125–$4,120 zone will become the last line of defense, as it overlaps with the 200-period exponential moving average and the rising trendline since late October, making it a strong support zone and a potential turning point for the medium-term trend.

Contradictions in Fed signals… Uncertainty about future path after rate cut

The Fed recently cut the benchmark interest rate by 25 basis points, but limited future cuts to only one more through the dot plot, dampening market expectations. It was also reported that two members cast hawkish dissenting votes during the meeting, raising concerns that the pace of monetary easing next year could be more gradual than expected.

Amid this ‘mixed signaling,’ Fed Chair Jerome Powell’s dovish remarks—such as “the labor market is exposed to downside risks”—temporarily weakened the dollar and boosted gold prices. However, the lack of clear guidance on the schedule for future rate cuts has again put a brake on the rally.

Market sentiment polarization… Tug-of-war between risk assets and geopolitical risks

The strong performance of global stock markets has fueled a ‘risk-on’ sentiment, increasing capital outflows from safe assets like gold. Typically, when stock prices rise, capital tends to shift away from gold.

However, geopolitical tensions are acting as a resistance to gold’s decline. With no progress in Russia-Ukraine ceasefire negotiations, Ukraine’s drones have attacked Russian-affiliated tankers(in the Black Sea), and President Putin reaffirmed his intention to secure the Donbas region, taking a hardline stance. These geopolitical risks are serving as a structural support preventing gold from falling easily below $4,200.

Going forward, the market is expected to reassess its direction based on employment indicators such as the US initial jobless claims report.