By Rania Gule, Senior Market Analyst at XS.com – MENA
Gold stabilized near the $4,250 level on Monday morning, speaking the language of the markets even before the data does, and displaying exceptional strength in a price movement that coincides with the start of a new month and a sensitive phase in the U.S. monetary policy cycle. From my perspective, the current landscape does not reflect a transient rise as much as it signals a strategic repositioning by investors in anticipation of a more flexible monetary phase in the coming weeks. Trading near a six-week high is not merely an indication of strong buying momentum; it reflects a growing conviction that gold is entering a pre-pricing phase for the expected Federal Reserve rate cut—something that may reshape the market’s broader trend in the next quarter.
Additionally, the broad weakness in the U.S. dollar is providing a key pillar of support for this rally, forming both a technical and fundamental driver that cannot be ignored in explaining gold’s stability above sensitive levels. Markets currently expect, with an 87% probability, that the Federal Reserve will cut interest rates by 25 basis points in the December meeting. In my view, these expectations are not extraordinary; rather, they reflect consistency between economic indicators and policy direction. Recent economic data points to clear deceleration, inflation is on a downward path, and political tensions within the U.S. administration make it more difficult to maintain a strictly hawkish stance. Therefore, the current weakness of the dollar is not temporary—it reflects a deeper shift in policy expectations.
The dollar has just experienced its worst week in four months, as investors seek safe havens or alternatives that preserve value in an environment where the real return on dollar-denominated assets is shrinking. In my view, this point represents the core of gold’s current strength. When the dollar settles into a slow yet persistent downward trend, gold becomes more attractive—even to investors who typically avoid high-risk positions. This explains why gold bulls are now targeting the $4,300 level, seeing it not only as achievable but logical given the weakening U.S. currency and falling bond yields.
The picture becomes even more complex when adding the political dimension surrounding the selection of the next Federal Reserve Chair. Reuters reported that White House economic adviser Kevin Hassett is the frontrunner for the position, while Treasury Secretary Scott Bessent indicated that President Trump may announce his decision before Christmas. From my perspective, the markets usually react strongly to signals regarding future monetary policy, and identifying the next Fed Chair is a core element in shaping these expectations. If a dovish figure is selected, investors may pre-emptively inject more liquidity into gold, which stands to benefit most from an extended easing cycle.
Meanwhile, investors are awaiting the U.S. ISM Manufacturing PMI for November, expected to fall slightly to 48.6 from 48.7. Although such a decline seems modest, its economic meaning is significant. In my view, remaining below the 50 threshold for an extended period reflects actual contraction in the sector, putting pressure on Federal Reserve policymakers to adopt growth-supportive measures. Any renewed confirmation of manufacturing contraction may strengthen expectations of a rate cut, increasing downward pressure on the dollar—potentially paving the way for gold to move steadily toward $4,300 and possibly beyond.
Any additional weakness in manufacturing data is likely to reinforce rate-cut expectations, especially given how sensitive markets have become to indicators of real economic activity. From my perspective, gold at this stage is not only moving in response to economic data but also to political uncertainty and long-term monetary expectations—giving it broader upside potential compared to previous periods.
By the end of the week, investors will face a wave of crucial U.S. data releases: the ADP employment report, ISM Services PMI, weekly jobless claims, and the core PCE price index—the Federal Reserve’s preferred inflation measure. In my view, any signs of labor-market cooling or weaker inflationary pressures will intensify the pressure on the Fed to cut rates, which would keep the dollar under pressure and open additional upside room for gold heading into the coming FOMC meeting.
Overall, I believe gold is entering a decisive phase that may determine its trajectory for the first quarter of next year. If it succeeds in delivering a strong daily close above $4,250 and holding above that level, this could serve as a new launch point that gives buyers the confidence to aim for higher targets. However, if U.S. data surprises strongly in favor of the dollar, gold may experience volatility—yet in my view, such moves would not reverse the broader bullish trend as long as the Federal Reserve remains on a path toward easing.