Gold Price Prediction: $4,500 Rejected—Why $4,606 Is Still in Play
Gold prices went bananas in early European trading, briefly pushing towards that $4,500 mark but then basically letting...
Quick overview
- Gold prices surged towards $4,500 before retreating to $4,463 due to cautious investor sentiment ahead of U.S. economic data releases.
- Safe-haven demand remains strong amid geopolitical uncertainties, particularly regarding the situation in Venezuela, which supports gold prices.
- The Federal Reserve's outlook suggests rates may stay low, reinforcing gold's mid-term bullish bias as market expectations lean towards further easing.
- Technically, gold is forming a tightening triangle below $4,500, with key resistance levels identified between $4,499 and $4,548.
Gold prices went bananas in early European trading, briefly pushing towards that $4,500 mark but then basically letting off the gas and pulling back to $4,463. The sudden drop-off was mainly a case of investors playing it cautious ahead of some big U.S. economic data releases, rather than a genuine shift in sentiment. And despite that intraday pullback, gold remains firmly in demand – and that’s largely because of a mix of the usual geopolitical uncertainty, plus hopes that U.S. interest rates will start heading down in 2026.
The price chart shows the market is just trying to catch its breath after a big run and hasn’t actually started rolling over yet. So there are still buyers around on the dips, keeping gold nicely above those recent support levels and keeping the long-term bull trend intact.
Geopolitical Risk Keeps Safe-Haven Demand Rock Solid
Safe-haven demand is still keeping gold in good standing. The Venezuela situation has just ratcheted up regional uncertainty, prompting investors to keep a close eye on developments. Markets tend to react quickly to these things, and gold has stepped up to the plate again as people go to hedge when they get spooked about political risk.
That demand has actually helped cushion prices, even as short-term traders sell back their profits at record highs. As long as the uncertainty persists, we can expect buying interest to pick up on any pullbacks.
Fed Outlook Keeps Gold’s Mid-Term Bias Bullish
And when it comes to the Fed, we’re still hearing that rates are likely to stay low for a while yet. The minutes from the last FOMC meeting showed that most Fed policymakers are still keeping the door open to further rate cuts if inflation really starts to cool, even though there are some differences in timing and pace.
Using the CME FedWatch Tool to gauge market expectations, we can see that the market is currently pricing an 82% chance that rates stay put at the January meeting, while still pricing in further easing down the line. Which all helps lower yields and means there’s less incentive to go for yielding assets, leaving gold with a bit more structural support.
But of course, all of that could change with the next batch of U.S. data, including the ISM Services PMI and the December jobs report. If those numbers look strong, then it might lift the dollar a bit, but if they come in weak, then that will just reinforce the case for more easing.
Gold Technical Outlook: Triangle is Tightening up Below $4,500
From a technical standpoint, gold is basically finding its feet in a rising channel after bouncing off the $4,274 swing low. On the 4-hour chart, the candles are showing a bit of weakness around $4,500, suggesting selling resistance just below the high watermark from back in December.
This is starting to look like a tightening triangle within the broader uptrend, and that can often be a sign that gold is about to break out in a big way. Key resistance lies between $4,499 and $4,548, and if gold can clear that zone, it opens the door to $4,606. On the downside, support is at $4,397 and $4,338, with the trend support still at $4,274.
RSI is back in the mid-50s, indicating the momentum is balanced rather than exhausted. And when we look at Fibonacci retracement levels, gold is holding above the 38.2% level, which keeps the bearish bias intact.
Trade Setup
- Buy on a pullback to $4,400
- Target: $4,548
- Stop loss below $4,335
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