Gold market analysis

"Three Possible Performances of Gold Prices Before the Interest Rate Decision" 8/12/2025 10:21 Completed 

Last Friday, the gold price staged a dramatic reversal. The spot gold price maintained an upward trend after the midday trading in Tokyo but plunged sharply about half an hour before the London market closed, hitting a high of $4,259.18 and then falling below the $4,200 mark within half an hour. It rebounded slightly but was capped at around $4,220 and then dropped again, closing at $4,197. From the daily chart, it can be seen that the gold price approached $4,265 on December 1st but was blocked and fell back. On November 13th, it rose to the $4,245 level but closed lower on the same day. It has since continued to decline. Last Friday, it was also blocked at around $4,260 and then dropped sharply. For the time being, it can be judged that the $4,250 to $4,265 range is an important resistance zone for the spot gold price. In other words, a breakthrough above $4,265 will open the door for the gold price to set a new historical high. 

Multiple factors have led to a sharp drop in gold prices. 

Gold prices were quite volatile in the Asian market this morning, hitting a low of $4,190.84 before rebounding and reaching a high of $4,211.75. However, it later retraced to test the $4,200 level again, where it seems to be experiencing a stalemate between bulls and bears. From a daily chart perspective, gold prices showed a single-day reversal pattern last Friday but remained above $4,157.15, thus not sending out a clear bearish signal. Instead, it has maintained a sideways pattern. From a 30-minute chart, gold prices broke out of the descending triangle in the midday Tokyo session last Friday, but then dropped sharply before the London close and even fell further this morning. However, it still held above the extended support level of the descending trend line. From a more optimistic viewpoint, last Friday's single-day reversal could be seen as a correction after the breakout, especially as gold prices are approaching the high of December 1st, posing a double top risk. Friday was also the last trading day of the week, with many positions being closed, leading to a strong pullback in gold prices. 

$4,200 remains a key support level. 

In the short term, gold prices must first hold steady at $4,200 before having another chance to reach a peak. Secondly, at 3 a.m. this Thursday, the Federal Reserve will announce its interest rate decision. The market expects a 25 basis point cut with a probability of 88.4%. There are three possible strategies for the market regarding this interest rate meeting. The optimistic strategy is to push gold prices to a high level and wait for the announcement. However, the risk is that the Fed may keep interest rates unchanged or support a rate cut with a smaller margin. A pessimistic or more extreme strategy is to push gold prices to a lower level, or even trigger a sell signal, and then sharply raise the price when the Fed announces a rate cut. In this case, all speculators who bought gold in advance expecting a rate cut will be wiped out, and retail investors who are bearish and fail to exit in time will also be eliminated. 

The gold price may also fluctuate within a range of 100 dollars around 4200 dollars, and then make a unilateral breakthrough after the interest rate decision is announced. My view is that you should not follow the trend only when the price fluctuation reaches 40 to 50 dollars. Moreover, only short-term operations are advisable this week. Do not assume that the gold price will enter a unilateral trend market just because of favorable or unfavorable US economic data, and ignore the risk that short-term reversal signals may bring! 

The above content is for reference only and does not constitute investment advice.