Gold prices rose by 0.4% to about $3,995 during the European trading session on Friday. This comes after hitting a recent high of around $4,060. The price correction followed a four-day winning streak, which ended with a ceasefire between Israel and Hamas, reducing the demand for safe-haven assets like Gold. Even with the easing tensions, the outlook for Gold remains strong. Officials from the Federal Reserve suggest that further interest rate cuts are likely. New York Fed President John Williams and San Francisco Fed President Mary Daly mentioned risks to the labor market and lower inflation pressure, which could lead to rate cuts. Such cuts would benefit non-yielding assets like Gold.

Technical Analysis

From a technical viewpoint, Gold prices have retraced after nearing $4,060, but the overall trend appears bullish. The 20-day EMA is trending upwards around $3,834.10. The price may rise toward $4,100, with important support at around $3,900. Emerging economies, particularly China, India, and Turkey, are significant buyers of Gold. In 2022, they purchased 1,136 tonnes, valued at $70 billion. Geopolitical instability and interest rates affect Gold prices, often inversely related to the US Dollar and other assets. A weaker Dollar generally leads to higher Gold prices since it is priced in dollars. The recent pullback from the $4,060 high should be viewed as a temporary pause, not the end of the upward trend. This dip is connected to the ceasefire news, which lowers the immediate demand for safe-haven assets. For investors, this may present an opportunity to buy before prices rise again. The Federal Reserve’s position is the most significant factor pushing prices higher. The latest jobs report for September 2025 showed only 85,000 new jobs, well below expectations. Fed officials are clearly signaling that more rate cuts are on the way this year. This environment of lower interest rates is very beneficial for non-yielding Gold.

Inflation and Monetary Policy Impact

Fears about inflation are also easing, with the September 2025 CPI at 2.8%, making it easier for the Fed to lower rates. Additionally, there remains strong demand, as the World Gold Council recently reported that central banks bought another 250 tonnes in the third quarter of 2025. This steady purchasing from major institutions supports the market. Given this positive outlook, selling puts or using bull call spreads may be effective strategies to take advantage of the expected upward trend. The technical outlook is solid, with crucial support near the $3,900 level. Any dips toward this area should be seen as buying opportunities. We have observed similar price movements before, especially in late 2023 and early 2024. Geopolitical de-escalation often causes short-term weakness within a broader uptrend driven by monetary policy. History shows that these pullbacks are usually better to buy into rather than fear. Create your live VT Markets account and start trading now.

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