Bulls Defend Support as Gold Market Eyes Fed Cut
NEW YORK (December 8) Gold is barely moving to start the week, holding just above Fibonacci support at $4192.36 as traders wait for the Fed on Wednesday. We’ve been parked near this level for a week, and you can feel the hesitation — buyers aren’t backing off, but they’re not chasing either. The broader bid is still driven by expectations for a rate cut, a softer dollar, and weak U.S. data that keeps the door wide open for easier policy.
Gold Market Steadies While Dollar Softens and Yields Hold
Daily US Dollar Index (DXY)
The dollar index is sitting near a one-month low, giving gold some breathing room as overseas buyers pick up inventory at better levels. Analysts continue to frame the move as a rate-cut story. UBS highlighted the weaker dollar and expectations for a Fed cut as the main supports. FedWatch now shows around a 90% chance of a 25-bp cut — a big jump from about 67% a month ago — and that shift has kept sellers on the sidelines.
Treasury yields are holding steady, with the 10-year near 4.149% and the 2-year around 3.581%. Even a one-basis-point move is getting attention here because traders know the reaction function flips fast if Powell leans too hawkish on forward guidance. For now, yields aren’t doing enough to shake gold traders out of their positions.
Support at $4192.36–$4133.95 Still Defines the Gold Outlook
Daily Gold (XAU/USD)
From a technical perspective, nothing matters more than the support band at $4192.36 to $4133.95. Buyers have defended this zone for a week, and under it sits the 50-day moving average at $4083.40 — the trend indicator that’s been guiding the market higher for months. A break of that 50-day would invite heavier selling, but until then, dip-buyers stay in control.
On the upside, last week’s swing top at $4264.70 is the only obstacle standing between gold and the record high at $4381.44. That creates a clean setup: traders can either buy the breakout through $4264.70 or wait for a pullback into the support band. These spots only show up a few times a year, and usually they mark the beginning of a fresh leg.
Markets Brace for a Potentially “Hawkish Cut”
The risk heading into Wednesday is that the Fed cuts but pushes back on the number of reductions coming in 2026. Several analysts warn the Committee is divided enough that dissent is almost guaranteed. If Powell signals a higher bar for additional easing, the dollar could catch a bid and test gold’s support zone. But if the Committee tilts dovish — even slightly — gold has room to run.
Gold Price Forecast: Bias Stays Bullish Into the Fed
Bottom line: gold remains bullish above $4192.36, with stronger support into $4133.95 and major trend support at $4083.40. As long as those levels hold, traders will keep leaning into upside setups. A clean break above $4264.70 opens the door to a run at the record $4381.44. The only thing that flips this view is a hawkish surprise that lifts the dollar and knocks gold below the 50-day.
FXEmpire
