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Yields Have Fallen Below Key Support Levels, Fully Activating Gold Bulls on Expectations of Fed Easing
Commodity
Summary:
Federal Reserve officials signaled a dovish stance, pushing yields lower and sending gold prices soaring.
Buy
TradingXAUUSD
EXP
4121.76
Entry Price
4346.00
TP
4038.00
SL
4161.65 +31.07 +0.75%
0
Point
Flat
4038.00
SL
CLOSING
4121.76
Entry Price
4346.00
TP
Fundamentals
Gold prices rose this week as the market continued to adjust expectations in anticipation of a Federal Reserve rate cut in December. Meanwhile, a significant decline in the 10-year Treasury yield also provided some support for precious metal prices. Although the market widely expects gold to hit new highs next year rather than this year, prices are still likely to continue climbing in the near term.
Recent remarks by Federal Reserve officials indicate that the balance within the Fed has clearly shifted toward the dovish camp.
San Francisco Fed President Mary Daly explicitly voiced support for cutting interest rates at next month's Federal Open Market Committee meeting. She told The Wall Street Journal that the Federal Reserve now faces greater risks from a sudden deterioration in the labor market than from inflation flaring up again.
She stated that the job market is currently “extremely fragile,” with the risk of a sharp, ‘nonlinear’ downturn rising. If policymakers wait too long, their room for maneuver will shrink. Daly emphasized that she no longer believes the Federal Reserve can “preemptively” address labor market weakness, arguing that the damage from a sudden drop in hiring would be harder to control than curbing inflation.
Regarding inflation, Daly stated that the likelihood of a substantial acceleration in inflation appears limited, noting that tariff-related cost increases this year have been lower than anticipated.
Although this was not a formal vote, her comments, combined with John Williams' earlier shift in stance, confirmed that the center of the Fed's policy spectrum has shifted significantly toward easing. This has elevated market expectations for a December rate cut to around 80%.
Technical Analysis
From a technical perspective, the 10-year Treasury yield breaking below the 4.036% support level indicates that the previous corrective rally from 3.947% to 4.162% has concluded. This follows the yield reaching resistance at the descending channel originating from 4.629% (May's high). Further declines toward the 3.947% low are possible.
Gold's break above US$4,132 indicates that the pullback from US$4,244 has bottomed at US$3,997. The rebound from US$3,886, serving as the second wave of a broader corrective pattern since US$4,381, remains ongoing. Gold is expected to extend gains toward US$4,244 and beyond, with weakening yields providing support. However, strong resistance near the US$4,346 high is anticipated to cap upside, thereby hindering the third upward wave of this pattern.
Trading Recommendations
Trading Direction: Buy
Entry Price 4118
Target Price: 4346
Stop Loss: 4038
Valid Until: December 11, 2025 23:55:00
Support: 4109, 4098, 4087
Resistance: 4155, 4168, 4211
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