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Demand Yet to Peak, Longs May Stage a Comeback
Commodity
Summary:
The market is beginning to treat gold as a hedge against a Fed "policy misstep." While prices have pulled back, fundamentals remain solid and cyclical demand for gold has yet to peak.
Buy
TradingXAUUSD
EXP
4070.94
Entry Price
4346.00
TP
4038.00
SL
4137.46 +2.91 +0.07%
0
Point
Flat
4038.00
SL
CLOSING
4070.94
Entry Price
4346.00
TP
Fundamentals
September U.S. non-farm payrolls exceeded expectations, reinforcing the Fed's bias toward delaying rate cuts. Yet a central question now confronts markets: how can the FOMC ensure policy correctness when key data are still missing? Consequently, although a high-rate regime should be bearish for gold, there is growing evidence that the market is beginning to treat bullion as a hedge against "policy error." Should the Fed stand pat in December and subsequent releases prove that skipping a cut was a mistake, dollar confidence could quickly erode. Gold, by contrast, would emerge as the more reliable safe haven. For now, this remains a secondary narrative, but it can still provide a structural bid for the gold, reflecting waning conviction that the Fed can steer the economy accurately under incomplete information.
Demand Dynamics: Unlike the past three years, the current precious-metals rally is primarily driven by cyclical gold demand. Looking into 2026, both cyclical demand and structural tailwinds are expected to keep gold and silver prices on an upward trend. In our base-case scenario, gold reaches $4,500 oz in 2026, implying further upside from current levels.
We contend that cyclical investment demand for precious metals has yet to peak, as U.S. monetary policy is poised to pivot toward easing in the near term, while the risk of a de-anchoring of long-run inflation expectations is likely to persist. Meanwhile, under the emerging macro regime, the unique portfolio-hedge value of physical gold and silver's status as a strategic critical mineral will become increasingly salient, providing structural support from official-sector accumulation, private bar-and-coin uptake, and regional inventory stockpiling.
Technical Analysis
From a technical perspective, gold prices successfully held the upward trend line that has been in place since late October. This support level is currently located near $4,030, coinciding with the MA200 on the 4-hour chart. Structurally, gold is forming an early inverse head-and-shoulders pattern, suggesting a continuation of the upward move.
The supply zone at $4,080 now acts as the immediate resistance for bulls aiming to break through the $4,100 threshold. If gold can sustain a breakout and establish a foothold above this level, it is likely to advance further toward the next major resistance zone between $4,123 - $4,142. This upward momentum could extend, potentially driving prices higher to test the previous selloff level at $4,344.
Trade Recommendations
Trade Direction: Buy
Entry Price: 4063
Target Price: 4346
Stop Loss: 4038
Valid Until: December 10, 2025 23:55:00
Support: 4061/4039/4021
Resistance Levels: 4083/4091/4101
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