By Ahmad Assiri, Research Strategist at Pepperstone
Gold extended its strength further above the $4000 oz mark this week after establishing a relatively solid support base, with range retests enhancing market confidence and attracting buying interest, supported by the alignment of this stability with the 50 day moving average. While the earlier sharp rally toward $4400 effectively ended the one way trade, the market context has since become more defined, with gold now repositioning within a smaller price range.
The dominant driver this week, and the most influential force behind gold’s upside at the moment, has been the market’s growing shift toward a more dovish tone in US rate expectations. Investors are now pricing in a near-term near-certain rate cut in December, a repricing that has meaningfully strengthened gold’s appeal. This sentiment driven support has lifted the metal toward the $4200 level, with buying flow leaning toward a test of the smaller channel’s upper boundary at $4240 during the current relatively thinner liquidity conditions of the Thanksgiving holiday period, a backdrop that often accelerates price movements.
Volatility is noticeably softer than during the previous surge that pressured short sellers, giving traders now more room to manage risk and engage in two way positioning. With the dovish policy tone continuing to shape asset pricing, in my view the near term base case remains for gold to stay range bound.