- Gold price remains supported above $4,300 level, looking to close the year with more than 60% annual gains.
- The mixed US NFP data weighed on the dollar, supporting gold.
- Central bank demand and a dovish Fed pose a long-term bullish narrative for gold.
The gold price maintains a positive momentum above the $4,300 level, near its seven-week high. The move highlights shifting market expectations around US interest rates amid cooling US data. Investors stay focused on the Fed’s next steps as gold continues to benefit from lower yield expectations and a softer dollar.
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The metal has gained more than 60% since the start of 2025, marking its strongest annual performance in decades. It has now consolidated firmly above the $4,000 mark, suggesting long-term buyers remain active on pullbacks.
The recent US employment report showed mixed signals, as the NFP came in upbeat, rising to 64k in November. However, the unemployment rate rose to 4.6%, the highest level since 2021, while average hourly earnings gained only 0.1%. This shows cooling labor market conditions despite positive headline job growth. The deteriorating labor markets could force the Fed to cut rates further in 2026, offering extended support to the non-yielding metal.
The Fed already delivered a third rate cut in its December meeting, with a projection of one more cut in 2026 as policymakers remain divided. However, the markets continue to price in two rate cuts in 2026, leaving a gap between market expectations and official guidance.
Market participants are now focusing on the US CPI and PCE index reports, which could impact the Fed’s policies. Signs of easing inflation without a surge in growth would push the central bank to maintain easing policy, supporting gold prices. Conversely, sticky inflation could slow the pace of rate cuts, limiting the near-term upside in bullion.
Structural demand remains supportive for the precious metal. Central banks have been purchasing more gold in the last three years. The World Gold Council reports reveal that net central bank purchases totaled 254 tons as of October. Countries like China, Poland, and Turkey have gradually increased the amount of gold held in their reserves as a part of a diversification away from the dollar.
The amount of gold that China holds as part of its foreign exchange reserves is now more than 8%, compared to a significant decline in the first half of the year. Such a gradual build-up indicates strong demand, making it less vulnerable to short-term fluctuations.
Some analysts believe that gold’s upside target is $ 5,000 by the end of 2026, provided prevailing supportive conditions persist. However, the prospects are not that optimistic. Other analysts suggest that gold could fall below $4,000 if the global economy stabilizes and the Fed halts its easing process. A stronger US dollar and reduced volatility would likely prevent the upside and could lead to profit-taking following the robust rally witnessed this year.
Gold Price Technical Forecast: Consolidating Above $4,300
The gold price 4-hour chart shows a solid support near the 20-period MA at $4,310, limiting the downside. The RSI remains above the 50.0 level but is trending downward, indicating consolidation above the $4,300 level.
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A breakout of $4,300 level could push the prices to the 50-period MA at $4,255, ahead of the 100-period MA at $4,220. On the upside, $4,350 remains a tough nut to crack ahead of all-time highs around $4,380.
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