Gold has paused after hitting a record high of $4,526 and is currently trading at around $4,485, marking a 0.25% drop for the day. This decline is due to traders taking profits in a generally positive market. The expectation that the US Federal Reserve will adopt a dovish strategy may limit any recovery of the US Dollar, which could benefit Gold. Ongoing geopolitical uncertainties also provide support for Gold and act as a counter to declining trends.

Technical Analysis

The daily chart indicates that the Relative Strength Index (RSI) shows overbought conditions, leading to some profit-taking. Still, the overall technical outlook remains positive for buyers, supported by an upward channel and strong moving averages. Gold remains above the 50-day Simple Moving Average at $4,167.09, suggesting any pullbacks are likely to be short-lived. The Moving Average Convergence Divergence (MACD) indicates continued momentum for buyers, as its line stays above the Signal line. While some pauses might occur, they don’t weaken the overall upward trend. As Gold hovers just below the $4,500 mark on Christmas Eve, we see this as a healthy break rather than a reversal. The quick climb to the all-time high of $4,526, combined with the overbought RSI, indicates that some profit-taking in light holiday trading is normal. This small dip could be a buying opportunity in the coming weeks. The fundamentals strongly favor Gold, bolstered by expectations of a dovish Federal Reserve in the new year. Recent economic data from late 2025 supports this view, with November’s Non-Farm Payrolls significantly lower than expected at 95,000 and a revised Q4 GDP forecast of just 0.8%. These conditions limit the US Dollar’s potential, making Gold—a non-yielding asset—more appealing.

Potential Upside

This rally has been building for a while, fueled by persistent inflation in 2024. Geopolitical tensions and record central bank buying, with the World Gold Council reporting a new quarterly high in Q3 2025, provide strong support for Gold prices. This institutional demand helps prevent any major corrections. For derivative traders, this dip offers a chance to prepare for the next upward move. We’re monitoring the previous channel resistance around $4,430 as an initial support level for new long positions. Using options like buying call spreads can be a smart way to engage with potential upside while managing risk at these high prices. Although the trend is strong, a deeper pullback toward the 50-day moving average at $4,167 is possible if profit-taking accelerates post-holidays. This level serves as a key support line that bullish traders need to protect. As long as Gold stays above it, the strong upward trend observed over the past two years will remain intact. Create your live VT Markets account and start trading now.

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