Gold Set for a Big Break? Market Tension and Fed Signals Fuel Bullish Setup
Gold held firm in early European trade as markets continued to price in a Federal Reserve rate cut in December.
Quick overview
- Gold prices remain stable as markets anticipate a Federal Reserve rate cut in December, with an 87% probability now assigned to a 25-basis-point reduction.
- Geopolitical tensions are sustaining demand for safe-haven assets like gold and silver, as institutional ETF outflows slow amid uncertainty.
- Technical analysis shows gold is consolidating within a symmetrical triangle, with key support levels holding firm and a bullish continuation setup possible above 4,193.
- Traders are advised to consider entry points near the ascending trendline or wait for a breakout above 4,193 to target higher resistance levels.
Gold held firm in early European trade as markets continued to price in a Federal Reserve rate cut in December. The shift in expectations has strengthened demand for non-yielding assets, especially with several Fed officials signaling that lower rates remain under consideration. CME FedWatch now assigns an 87% probability to a 25-basis-point cut, up sharply from 39% a week ago, reinforcing the view that monetary conditions are set to ease further.
Attention has also turned to the potential appointment of Kevin Hassett as the next Fed Chair. His policy stance aligns with a more accommodative approach, adding an additional layer of support for gold as markets anticipate softer real yields ahead.
Geopolitical Uncertainty Keeps Defensive Demand Steady
Broader geopolitical tensions continue to anchor safe-haven appetite. Negotiators involved in key global discussions offered conflicting updates this week, underscoring the absence of a clear diplomatic path. Institutional allocation data reflects this environment, with gold ETF outflows slowing after several weeks of steady reductions.
Silver is tracking the same defensive tone, supported by hedging flows and investor positioning aimed at assets resilient to global uncertainty. Analysts note that safe-haven demand typically strengthens when geopolitical ambiguity overlaps with expectations of monetary easing.
Dollar Stabilizes but Fails to Shift the Broader View
A mild recovery in the US Dollar acted as a temporary headwind, but it hasn’t altered the broader trend. With no major US economic data on today’s schedule, price action across precious metals remains driven primarily by policy expectations and risk conditions.
The underlying narrative remains intact: pockets of softer economic activity, rising odds of Fed easing, and persistent geopolitical uncertainty continue to support the medium-term outlook for gold and silver.
Gold Technical Outlook
Gold continues to compress inside a wide symmetrical triangle, with price slipping back after testing resistance near 4,193. The rejection produced a visible wick, but no decisive reversal pattern such as a shooting star or bearish engulfing has formed.
Support remains firm along the ascending trendline, repeatedly defended near 4,138 and 4,086, preserving the higher-low structure. The 20-EMA at 4,153 is rising beneath price and acting as dynamic support. RSI near 60 shows steady momentum with no bearish divergence, suggesting consolidation rather than exhaustion.
Potential Trade Opportunity
A bullish continuation setup activates only if gold breaks and closes above 4,193. A full-bodied breakout candle—not a wick—would strengthen conviction. A move above this barrier would expose 4,274, followed by 4,324, the next major resistance cluster.
Trade Structure
- Entry: Break and close above 4,193
- Targets: 4,274 and 4,324
- Stop-Loss: Below 4,153 (conservative) or below 4,138 (strong defensive level)
For traders waiting for a pullback, the ascending trendline near 4,138–4,086 offers a secondary entry zone. Look for rejection signals such as a hammer, bullish engulfing, or long-tail candle before entering.
A breakdown below 4,086 would invalidate the bullish bias and open the door toward 4,024. Until then, the broader structure continues to favor the upside with higher lows intact and momentum stable.
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