Gold has pulled back from its recent record high of $4,526 and is currently trading at about $4,470. Although it rose by 3% this week, we are seeing some profit-taking as technical indicators suggest the market is a bit too hot. This year, gold prices have jumped over 70%, approaching their best annual performance since 1979. This surge comes from safe-haven buying due to geopolitical tensions, a weaker US dollar, and the Federal Reserve’s decision to lower interest rates by 75 basis points in 2025.

US Economic Indicators

US economic indicators are sending mixed messages. Jobless Claims fell to 214,000, while Continuing Claims increased to 1.923 million. The Q3 GDP growth was a solid 4.3%, yet Durable Goods Orders and Consumer Confidence are weaker, putting pressure on the US dollar. Markets expect the Fed to keep rates steady, but many are looking ahead to possible cuts. Ongoing geopolitical tensions, like the Russia-Ukraine conflict and instability in the Middle East, are adding to market unease. From a technical perspective, gold may be in a phase of short-term consolidation due to a bearish RSI divergence, but the overarching trend remains upward. Immediate resistance is noted at $4,500, while support might be at the 9-day SMA around $4,372. Gold continues to be a favored investment, valued for its historical role as a safe haven during tough times. Central banks, especially in emerging markets, have boosted their gold reserves, leading to record high purchases in 2022. Generally, gold moves inversely to the US dollar and other risky assets, influenced by factors like geopolitical unrest, recession fears, interest rates, and the US dollar’s strength.

Commitments And Market Movements

The recent dip from the peak near $4,526 appears to be a temporary consolidation rather than a full trend reversal. The light trading during the holiday season is likely intensifying this profit-taking, while the bearish RSI divergence serves as a technical alert. In the upcoming weeks, traders should be cautious about chasing new highs and instead be ready for a possible dip. The latest Commitment of Traders report indicates that speculative net-long positions are the highest since 2020, making the market susceptible to a sudden sell-off. We suggest buying protective puts with expirations in late January 2026 as a smart way to hedge current long positions. This will help you maintain your bullish outlook while safeguarding your portfolio against a decline toward the initial support at $4,381. Looking ahead to 2026, the fundamentals for gold look strong. The 75 basis points rate cuts by the Federal Reserve this year, along with market expectations for further easing, will keep the pressure on the US dollar. We witnessed a similar situation in 2019 when the Fed shifted from raising to cutting rates, leading to a significant gold rally that lasted over a year. Recent data backs this optimistic view. The Consumer Price Index report for November 2025 indicated persistent inflation at 4.1%, supporting the Fed’s cautious approach despite robust Q3 GDP numbers. Additionally, World Gold Council statistics show that central banks continued their record buying spree, acquiring another 280 tonnes in Q3 2025, which adds a solid foundation under the market. So, any substantial dip should be seen as a buying opportunity. The 50-day moving average, currently around $4,167, is a crucial level where buyers have previously entered the market. Selling cash-secured puts with a strike price near $4,200 for February 2026 could be an effective strategy to either generate income or buy in at a more favorable price. Create your live VT Markets account and start trading now.

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