Gold Near Record, Ready to Reversal?
Global gold prices remained high at around US$4,300 per ounce on Monday, not far from the record set last October. This strengthening follows a sharp rally in recent weeks, driven by expectations of further interest rate cuts by the Federal Reserve (The Fed), a weakening US dollar, and the market's need for hedging assets amid global uncertainty.
Fundamentally, gold's primary sentiment remains driven by the interest rate theme. The Fed has already cut rates three times this year and has signaled that additional rate hikes are highly unlikely. The market is even betting on several more cuts in 2026, although the Fed's official projections only indicate one additional rate hike. The expected lower interest rate environment and a weakening dollar are an ideal combination for gold as a non-yielding asset.
However, within the Fed itself, opinions are beginning to split. Several officials, including those from the Chicago Fed and the Kansas City Fed, believe the final cut should be delayed because inflation remains too high and some economic data has been distorted by the US government shutdown. On the other hand, weekly US jobless claims indicate the labor market is starting to cool. This mix of dovish and hawkish signals is making gold market participants increasingly sensitive to every data release and comments from central bank officials.
Globally, the latest Chinese economic data also adds to the cautious tone. Industrial production and retail sales in the country grew below expectations, confirming that the recovery of the world's second-largest economy remains shaky. For commodity markets, a weak China means long-term demand could be suppressed, but for gold, this condition actually strengthens the narrative of a global economic slowdown and supports gold's role as a safe haven asset. Geopolitical tensions surrounding Russia-Ukraine and US-Venezuela relations also contribute to this hedging demand.
In the medium term, gold's prospects are still supported by structural factors such as aggressive buying by central banks and inflows into gold-backed ETFs. Several international analysts even project that gold prices have the potential to test even higher levels in the next few years if the trend of central bank buying and low interest rate policies continues. However, they also caution that the higher the current price, the greater the risk of a correction when market expectations regarding the Fed begin to readjust.
Technically, gold remains in a strong uptrend. The zone around US$4,300 is a key area that will determine whether the current movement is merely a "short pause" or the beginning of a deeper correction. As long as the price remains above this area, the opportunity for an increase towards the US$4,350–US$4,380 range remains open. Conversely, failure to break through this resistance area and a fall back below US$4,300 could trigger profit-taking, pushing gold down to the US$4,260–US$4,200 area.
For today's movement, the market's primary focus will be on a series of delayed US economic data, particularly employment and inflation data, as well as further statements from Fed officials. Weaker-than-expected data could potentially strengthen the interest rate cut narrative and push gold to test new peaks. Conversely, if the data is strong and the Fed's tone becomes more assertive, gold could very well reverse direction quickly – making today's session potentially volatile for market participants.
Source : Newsmaker.id
