**Gold Prices Face Resistance** Gold prices fell as traders took profits after hitting six-week highs. The value of gold was influenced by a slight increase in the US Dollar and rising Treasury yields. Gold (XAU/USD) dropped over 1% and is now near $4,190. The market is predicting an 87% chance of a 25 basis points interest rate cut by the Federal Reserve. Geopolitical tensions continue, especially with ongoing Russia–Ukraine peace talks mediated by the US. The US Dollar Index remains stable at about 99.45 after a recent decrease. Recent economic data shows that the ISM Manufacturing PMI dropped to 48.2 in November, marking nine months of contraction. This weak economic outlook, along with hints from the Federal Reserve about easing policy, has increased expectations for rate cuts at their next meeting. Gold’s technical indicators suggest a slight downward trend after Monday’s rise. Support is identified near $4,190-$4,200, with additional support at $4,150-$4,160. If prices rally back to the $4,250 area, resistance is anticipated. Gold’s value as a safe haven is still affected by geopolitical risks and fluctuations in the US Dollar. Gold appears to be stabilizing around the $4,190 mark after its strong advance, likely due to classic profit-taking. Despite this pullback, the overall situation is influenced by the Federal Reserve’s potential actions. The market expects a high likelihood, near 87%, of a rate cut next week, which may limit how low gold prices can go. The case for a Fed rate cut is gaining strength, particularly after reviewing last month’s data. The October 2025 PCE inflation report indicated a cooling trend, showing a year-over-year rate of 2.8%. Coupled with Monday’s disappointing ISM Manufacturing report for November, this suggests that the economy is slowing enough for the Fed to consider easing its policies. **Gold Trading Strategies** For traders expecting the rate cut, this dip could be a great chance to prepare for another upward move. One strategy is to buy call options with strike prices above $4,250, betting that a dovish Fed statement will help gold surpass its recent highs. Alternatively, purchasing during a further drop towards the stronger support level around $4,150 could provide an advantageous entry point. However, short-term momentum is waning, and the dollar is stabilizing around 99.45. If the upcoming ISM Services and PCE data this week exceed expectations, it might push the rally back. Traders wary of this risk might consider buying put options to protect long positions or speculate on a bounce off the $4,150 support before the Fed meeting. With major economic reports and the Fed’s decision coming in the next week, we can expect significant volatility. Strategies like buying a straddle—where both a call and a put option are purchased—could be beneficial for those anticipating a large price swing but uncertain of its direction. This approach profits from any sharp move, whether up or down. Reflecting on this situation, it appears to be a direct result of the aggressive rate-hiking cycle we observed in 2023. Central banks have consistently purchased gold, boosting global reserves by over 800 metric tons in 2024 alone. This steady demand from the official sector supports prices, especially during times of economic uncertainty and changing monetary policies. Create your live VT Markets account and start trading now.

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