Gold prices rise above $4,300! Federal Reserve rate cut expectations and a weakening dollar ignite the market

Recently, the spot gold price has continued to rise, trading around $4,321.96 per ounce during the Asian session on December 17. This upward momentum is mainly driven by signs of softening in the US labor market, with the latest data showing the US unemployment rate unexpectedly rising to 4.6% in November.

The strengthening of expectations for Fed rate cuts has caused the US dollar index to fall to a two-month low, making dollar-denominated gold more attractive to international buyers.

01 Market Dynamics

This week marks a critical turning point in the gold market. The US employment report released on December 16 has become the focus of market attention, showing the US unemployment rate rising to 4.6% in November, up from 4.5% in September.

Despite non-farm payrolls increasing by 64,000, higher than the market expectation of 50,000, the rise in unemployment is interpreted by the market as a clear signal of economic slowdown.

Following the release of this data, gold prices reacted swiftly. Spot gold once surged to $4,334.52 per ounce before retreating to trade around the $4,300 level.

As of the Asian session on December 17, the latest London Gold quote was $4,321.96 per ounce, with a daily high of $4,325.04 per ounce.

02 Analysis of Three Major Driving Factors

Behind this round of gold price rally, three major factors are working together to create strong momentum.

The most core driver is the expectation of Fed rate cuts. Senior market strategist Bob Haberkorn from RJO Futures explicitly stated, “This data gives the Fed more reasons to cut rates.”

The US interest rate futures market expects a cumulative rate cut of about 59 basis points by 2026, equivalent to two to three 25-basis-point cuts.

Meanwhile, the continued weakening of the US dollar further enhances gold’s appeal. The dollar index has fallen to a two-month low, making dollar-priced gold cheaper for investors holding other currencies.

Additionally, geopolitical risks also provide safe-haven support for gold. Although rumors of a peace agreement between Russia and Ukraine temporarily weakened demand for gold as a safe asset, ongoing regional tensions continue to uphold gold’s status as a safe haven.

03 Price Trends and Technical Analysis

From a price performance perspective, spot gold closed at $4,310.21 per ounce on December 16, up 0.2% from the previous day. Market optimism about gold’s outlook remains, with some analysts predicting that if gold closes above $4,400 per ounce in 2025, it could potentially reach the range of $4,859 to $5,590 in 2026.

On the technical side, gold is currently at a critical decision point. Some analysts suggest that short-term prices are highly likely to challenge and break through the $4,380 level. If weak data continues to be released on Thursday and Friday this week, gold prices could break previous highs in the short term.

From a trading perspective, gold has formed a clear oscillation pattern on the 4-hour chart, with resistance concentrated around $4,350/$4,351, and support levels at $4,265–$4,255.

04 Institutional Views and Market Expectations

Major financial institutions hold different but overall optimistic views on gold’s future. Goldman Sachs’s latest research report states that the Fed may adopt a more aggressive rate cut path before 2026 than the market expects.

Josh Shafrin, Chief Strategist of Goldman Sachs Global Banking and Markets, said that the market should focus more on the trend of the unemployment rate rather than overall non-farm growth. Based on this judgment, Goldman Sachs expects this easing cycle to continue until 2026, with the federal funds rate possibly falling to 3% or below.

For traders, the market provides specific operational references. Some analysts suggest that the core of short-term trading is to look for suitable low-buy opportunities, mainly around the $4,300 level, followed by the $4,290–$4,280 range.

If the market aims to effectively break through $4,380 within this week, this support zone should not be substantially broken.

05 Investor Trading Guidelines

In the face of market volatility, investors need to develop reasonable strategies. In the short term, gold prices may repeatedly test key support levels around $4,300.

Technical analysts point out that short-term gold trends are more likely to be directly influenced by US macroeconomic data. Investors should closely watch the upcoming US November Consumer Price Index (CPI) and Personal Consumption Expenditures (PCE) price index releases.

If inflation data remains weak, it will further reinforce expectations of rate cuts, providing additional upward momentum for gold prices.

For investors with different risk preferences, differentiated strategies can be adopted. Conservative investors may consider building positions gradually near key support levels, while aggressive investors might wait for a breakout above key resistance levels before entering.

Regardless of the strategy, risk management is crucial. It is recommended to set reasonable stop-loss levels to control potential losses.

Future Outlook

As of the Asian session on December 17, the gold market remains highly volatile with bulls and bears in fierce competition. After breaking through $4,320, market focus shifts to the key resistance zone of $4,350–$4,380.

Wall Street traders are reassessing their portfolios. A senior precious metals trader stated, “The weakening dollar and falling Treasury yields are changing the game, with funds flowing from growth assets into tangible assets like gold.”

As market expectations for Fed policy continue to ferment, gold’s safe-haven attributes and investment value are becoming increasingly prominent amid uncertainty. Regardless of how the market evolves, gold’s role in investment portfolios has regained recognition among global investors.