- Momentum Momentum is fading as global interest rate expectations shift toward tighter paths for 2026.
- Key supports at 4190 and 4100 decide whether there is a deeper pullback.
- The rally lacks new catalysts as geopolitical conditions calm and Chinese demand risks increase.
Gold prices remained almost stable during the past week after a strong rise, as traders preferred to wait ahead of a week full of central bank decisions. Although the general trend still tends to be upward, the factors that may weaken this momentum are gradually increasing. I still watch for any short-term bearish reversal signals, but it is necessary for these signals to appear from the price action itself, and there is no point in pre-empting them..
Tightening direction for central banks in 2026
The usual seasonal decline in the US dollar in December maintained support for gold, but was balanced by expectations that global prices may reach the bottom of the tightening cycle, which kept bond yields high. Any new rise in these yields will weaken the attractiveness of non-yielding assets such as gold.
Attention has now begun to turn to central bank meetings starting this week. US data was mixed. There are some signs of strength. However, this cut appears to be already priced in, and is unlikely to add significant support to gold. What the market is actually waiting for is a more flexible tone regarding 2026, and therein lies the risk of disappointment.
As the end of the year approaches, conviction is emerging that a number of major central banks have already reached, or are about to reach, the lowest point in their monetary cycles. The Bank of Japan is not alone in taking a different path.
Markets are fully pricing in a 25 basis point rate hike next year in Australia, New Zealand and Canada, and even the Eurozone may join the trend based on its hawkish tone and improving economic data. If this shift takes hold, it will become more difficult to maintain high gold prices.
Where could gold prices falter?
The recent rise was based on traditional factors: geopolitical tensions between Russia and Ukraine, the debate about reducing dependence on the dollar, and continued demand from central banks—particularly in China. But in the absence of new catalysts, this rise appears to have lost part of its momentum, and the question arises: How long can it continue?
China represents the most sensitive element. If the People’s Bank of China reduces the pace of its gold purchases at these price levels, leveraged traders may quickly reduce their positions, and these movements are usually sharp and unorganized..
There are modest signs of easing global tensions: slow peace talks on Ukraine, the recent ceasefire in Gaza, and a marked improvement in trade relations between the United States and China. In theory, this should reduce the safe-haven premium for gold, but prices have remained more or less flat.
The weakness of the US dollar also contributed to establishing a good support base, but this stability may not last long. What the market is currently missing is a new catalyst. The Japan factor also stands out; The rise in Japanese bond yields due to expectations of an interest rate hike has raised concerns about the spillover of volatility to global markets. If carry trades start to decline, volatility may affect high-value US technology stocks and even precious metals.
Technical analysis of gold
Technically, gold is still moving within a clear upward trend, but the momentum of this trend is declining significantly, making it vulnerable to short disturbances if support levels begin to break..
The first level to watch is $4,190, which formed the bottoms of the last sessions. Breaking this level clearly may open the way towards the short-term trend line and then to $4,100, which is an important psychological level and the point from which the last bullish wave started. A daily close below 4100 will be a strong bearish signal and may pave the way for a drop towards 4000.
As for the resistance, it is still concentrated between $4220 and $4270, which is an area where the price stopped several times. A clear and convincing breakout of this range is necessary to restore momentum and open the way to attempt to record new highs.
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Disclaimer: This article has been written for informational purposes only; It does not constitute a solicitation, offer, advice, investment advice or recommendation as such, and is not intended to induce the purchase of assets in any way. I would like to remind you that any type of asset is evaluated from multiple points of view and involves significant risk, therefore, any investment decision and the risks associated with it remain the responsibility of the investor.
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