Gold is nearing the $4,200 mark, and attempts to dip below $4,140 are being limited. A slight rise in US yields is boosting the US Dollar, which is putting pressure on precious metals. This week, gold’s price has increased by 2.7%, largely due to expectations of the Federal Reserve easing its monetary policy. On Friday, the price peaked at $4,190 as the US Dollar remained steady during Thanksgiving. The US Dollar Index, which measures the Dollar against six other currencies, showed some recovery on Friday but is still on track for one of its worst weekly performances. Dovish remarks from Fed officials, along with weak US consumption data, have raised hopes for a rate cut in December, leading to a drop in US Treasury yields and the Dollar.

Technical Analysis of Gold

Looking at the technical indicators, gold’s outlook is positive. The 4-hour Relative Strength Index is above 60, and the MACD indicator shows bullish momentum. A rise above $4,100 signals the end of a bearish phase, with potential targets of $4,210 and $4,245. The support level at $4,140 helps maintain the bullish trend, but if it falls below that, we could see targets around $4,100 and between $4,025 to $4,040. The US Dollar has shown mixed movements against major currencies, especially declining most against the Australian Dollar (-1.60%). With gold staying above $4,140, the easiest direction seems to be up. Traders might want to consider buying call options with strike prices near the $4,245 resistance level, likely expiring in January 2026. This strategy allows participation in the expected price rise driven by speculation about Federal Reserve policy. The market’s belief in a rate cut in December 2025 is growing stronger, especially after recent economic data. The October 2025 Consumer Price Index report showed inflation cooling to 2.1% year-over-year, supporting the Fed’s dovish stance. Currently, Fed funds futures indicate a greater than 90% chance of a rate cut before the year ends.

Market Strategy and Opportunities

For traders dealing with gold futures, it’s wise to set a stop-loss just below the $4,140 support level to manage risk. A clear drop below this level could threaten the current bullish trend. This disciplined strategy helps protect capital if US Treasury yields unexpectedly increase. We’ve seen this pattern before, especially in late 2023 and early 2024. Back then, a shift in the Fed’s wording preceded a lengthy rally in gold prices. The current situation, with dovish comments from officials and declining consumption numbers, resembles that earlier phase. Furthermore, the broad weakness in the US Dollar offers additional trading opportunities. The dollar’s 1.6% decrease against the New Zealand Dollar this week shows that this trend isn’t isolated. This widespread decline suggests a lasting trend is developing against the greenback. Thus, shorting the US Dollar Index using futures or put options could be a beneficial strategy. Alternatively, traders might consider going long on stronger currencies, such as the Australian or New Zealand dollars. The weak US retail sales figures released last week further support a bearish outlook for the dollar in the coming weeks. Create your live VT Markets account and start trading now.

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