Gold Forecast: XAU/USD Holds Above $4,140 as Fed Dovish Shift Lifts Bullish Momentum
Gold extended its recovery during the early European session, holding firmly above $4,140 as traders grow more confident...
Quick overview
- Gold prices have risen above $4,140 as traders anticipate a potential rate cut by the US Federal Reserve in December.
- Comments from Fed officials about weak labor conditions have increased the likelihood of a rate cut, with probabilities now at nearly 80%.
- Technical analysis shows Gold has broken a multi-week descending trendline, indicating a shift in momentum towards buyers.
- Traders are advised to consider a long position if Gold closes above $4,155, with targets set at $4,201 and $4,245.
Gold extended its recovery during the early European session, holding firmly above $4,140 as traders grow more confident that the US Federal Reserve will deliver a rate cut in December. Softer labor conditions and increasingly dovish remarks from key Fed officials have helped reinforce the shift in expectations.
Fed Governor Christopher Waller noted that the labor market remains weak enough to justify another quarter-point cut, while San Francisco Fed President Mary Daly emphasized that job growth is turning more fragile. Their comments pushed rate-cut probabilities sharply higher, with the CME FedWatch showing nearly an 80% chance of a December cut—up from 30% earlier in the month.
Lower rates reduce the opportunity cost of holding non-yielding assets such as Gold, making the metal an attractive hedge as markets brace for a softer economic outlook. A cautious tone ahead of today’s US data releases—including PPI, Retail Sales, and the ADP employment report—has further driven safe-haven flows toward XAU/USD.
If these reports show another round of softening in prices and employment, the Fed’s easing path strengthens. Hotter-than-expected numbers, however, could offer the US dollar a short-lived lift.
Gold (XAU/USD) Technical Analysis: Trendline Break Signals Strength
Gold has broken out of a multi-week descending trendline on the 4-hour chart, shifting momentum back in favor of buyers. The breakout above 4,100 and the clean retest that followed created a higher-low structure, a key sign that bullish pressure is rebuilding.
Price is now consolidating just under $4,155, a level that rejected buyers twice this month. A strong bullish candle above this zone could open the path toward $4,201, followed by $4,245—the next major supply zone.
Candlestick behavior supports the bullish case. The breakout candle printed a solid body, followed by a spinning top that reflects acceptance rather than exhaustion. The 20-period EMA has turned upward and is beginning to align with short-term averages, tightening the structure beneath price.
RSI has climbed to 62, breaking its descending line and showing improving strength without entering overbought territory. Importantly, no bearish divergence appears at current levels.
Trade Idea: Buy Breakout Above $4,155
Traders may consider a long position if Gold closes above 4,155 on a full-bodied bullish candle. This confirms that buyers have absorbed supply at a key resistance.
- Entry: Above $4,155
- Target 1: $4,201
- Target 2: $4,245
- Stop-Loss: Below $4,100
The logic is simple: follow the trendline break, respect the higher lows, and let price confirm momentum before entering. This setup remains valid as long as Gold holds above $4,100, which serves as the structural pivot for the current bullish leg.
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