Gold, slight adjustment as it moves to secure profits after record-breaking

After Reaching New Highs, a Pullback Is Observed - Expectations of a Rate Cut and Safe Asset Demand Will Likely Limit the Decline - Record Annual Return of 70%, the Best Year in 45 Years

On Monday during the Asian session, the price of gold(XAU/USD) surged to around $4,550, setting a record, but then experienced a partial retreat as selling pressure emerged to lock in profits. This is attributed to the fading of excessive expectations for gold price increases as the year-end holiday approaches. Additionally, the outlook for a strong dollar could also act as a negative factor for gold prices, potentially posing a greater burden for foreign currency investors.

Despite the short-term correction, gold has risen by 70% over the next 2025 years, achieving the best annual performance since 1979. As the US Federal Reserve(Fed) hints at a rate cut next year, the likelihood of a significant decline in gold prices is low. Lower interest rates reduce the opportunity cost of holding gold, an asset without dividends, making it more attractive. Furthermore, ongoing geopolitical instability continues to highlight gold’s value as a traditional safe haven asset.

Technical Trends and Resistance/Support Levels from a Gold Investment Perspective

Gold prices are temporarily declining in the short term, but the medium-term upward trend remains intact. Gold is moving stably above the 100-day exponential moving average(EMA), and the Bollinger Bands suggest room for further gains. However, the Relative Strength Index(RSI) has exceeded 70 near the high, indicating that a period of correction may be needed before the next substantial rally.

Key price levels for gold investors to watch are as follows: the all-time high of $4,550 will serve as a short-term resistance level, and breaking through it could target the psychological barrier at $4,600. On the support side, the December 23 low of $4,430 is the first line of defense, and if it breaks, the price could fall further to December 22’s $4,338 and December 17’s $4,300.

Economic Conditions and the Background for Choosing Gold Investment Methods

The US Federal Reserve’s monetary policy stance is a key variable in gold investment decisions. The Fed has lowered interest rates three times this year, and markets are reflecting the possibility of two additional cuts next year. According to CME’s Federal Open Market Committee(FOMC) futures analysis tool, the probability of rate cuts is estimated at 18.3%.

Labor market signals are also noteworthy. The weekly initial jobless claims in the US last week totaled 214,000, better than expectations, indicating a strengthening employment market and potentially influencing Fed policy decisions.

Geopolitical risks persist. President Donald Trump stated that significant progress has been made in peace negotiations with Ukraine, but no progress has been made on territorial issues. Such uncertainties are likely to continue supporting demand for gold as a safe asset.

While gold prices currently have strong fundamentals, overheated technical indicators suggest short-term correction risks. The combination of a 2026 rate cut outlook and a preference for safe assets could be positive factors for gold investment in the long term.