Gold Price Analysis: Gains and Pullbacks in a Volatile Week's End

Weekly Gold Price Movement Summary

Gold prices experienced sharp fluctuations this week, retreating from their highest levels in three weeks following the reopening of the US government and the end of the longest government shutdown in American history. The market entered a phase of collective re-pricing, as the quick return of government operations rapidly impacted investor sentiment, prompting profit-taking after the previous strong rally.

Gold remains with weekly gains exceeding 5%, demonstrating its continued appeal as a safe haven amid uncertain economic conditions. However, markets are suffering from a lack of economic data that was expected to be released during the shutdown period, leading to ambiguity in interpreting Federal Reserve policy signals and reducing the probability of a rate cut in December to just 50%.

Morning Session: Positive Movements and Ongoing Fluctuations

Gold started today, Friday, at $4,171 per ounce, with clear fluctuations during the Asian session supported by buying on dips. The price oscillated between $4,171 and $4,201 per ounce, with attempts to reach $4,244.94, the highest level recorded this week.

These movements reflected a state of imbalance between the upward support driven by a weak US dollar and rate cut expectations, and the correction wave resulting from profit-taking and temporary liquidity constraints after the government shutdown.

Impact of the End of the Government Shutdown on Market Dynamics

The end of the US government shutdown after 43 days directly affected financial market dynamics. Markets experienced a broad sell-off across stocks, commodities, and precious metals, as investors acted based on previous expectations. The reopening revealed gaps in economic data that had not been collected during the shutdown, especially concerning the US labor market.

Weak labor market expectations were a key driver of previous gold price increases, but the absence of data made investors more cautious, leading to price fluctuations and limiting upward momentum.

Rate Cut Probabilities and Their Impact on Demand

US monetary policy expectations remained among the most influential factors on gold movements. The probability of a rate cut in December fell to around 51% according to market tools, following hawkish statements from Federal Reserve members.

Rate cuts generally support gold because it is an asset that does not offer direct yield, and demand for it increases as a safe haven during periods of economic uncertainty. However, the Fed Chair recently warned that any additional cut this year is not guaranteed, which has curtailed the short-term bullish momentum for gold.

Supporting Factors: The Dollar and Bond Yields

The DXY dollar index continued its decline for the second consecutive session, making gold more attractive to investors holding other currencies. Conversely, rising US Treasury yields increased the opportunity cost of holding gold.

This balance between a weakening dollar and rising bond yields created a volatile price range between $4,151 and $4,201 per ounce. These interactions highlight the close relationship between gold as a hedge and global interest rates and liquidity.

Market Sentiment and Profit-Taking Pressures

Markets experienced a broad sell-off following the reopening of the US government, significantly impacting gold prices. Prices retreated from their three-week high of $4,244.94 per ounce, reflecting investor profit-taking after a strong rally.

Despite the temporary correction, gold remains supported by other fundamental factors. Current market sentiment reflects a balance between short-term selling pressures and long-term hedging demands.

Technical Analysis of Price Movements

Gold continues to trade within a strong range at the end of the week, with prices near a short-term resistance zone between $4,188 and $4,200. This consolidation followed a clear upward wave that started from $4,046.

On the four-hour chart, the overall trend shows a gradual recovery, with prices stabilizing above several minor peaks and beginning to form an ascending bottom. The all-time high at $4,381 remains the primary target for investors.

The Relative Strength Index (RSI) currently ranges between 60 and 67, indicating positive momentum without entering overbought territory. Breaking above the $4,188–$4,200 range could push gold toward $4,270 first, then retest the record high.

Key Support and Resistance Levels

Support Levels:

• $4,171: The first support level for the current move; breaking it could lead to short-term bearish pressure on gold.
• $4,046: The foundation of the weekly bullish trend.
• $3,928: A major support level, representing the last line of defense.

Resistance Levels:

• $4,188 – $4,200: The strongest technical hurdle in the near term.
• $4,270: The medium-term target for the current upward wave.
• $4,381: The historic peak, representing a critical milestone.

Performance of Other Precious Metals

Silver rose by 1.3% to $53 per ounce, heading for its best week since September 2024 with an increase of approximately 9.7% since the start of the week. This performance reflects ongoing demand for silver as a hedge asset alongside gold.

Platinum increased by 1% to $1,596.10 per ounce, while palladium rose by 1.4% to $1,446.31 per ounce. These movements confirm that markets are still influenced by macroeconomic factors, and gold, silver, and other precious metals remain important assets for traders seeking to hedge against market volatility and geopolitical risks.