In early Asian trading on Wednesday (December 31), spot gold moved within a narrow range, trading around $4,366.95 per ounce. Although spot gold staged a strong rebound at one point on Tuesday, gains ultimately narrowed, reflecting the tug-of-war between persistent safe-haven demand and a strengthening U.S. dollar. Looking at the full year, however, gold prices have surged by 66%, putting 2025 on track to be the strongest year since 1979. This remarkable performance has been driven not only by expectations of Federal Reserve rate cuts, but also by robust central bank gold purchases, inflows into gold ETFs, and the combined impact of major international geopolitical events.

As the market enters the final stage of 2025, gold has experienced a dramatic roller-coaster ride. On Monday, spot gold plunged sharply from last Friday’s record high of $4,549.71 per ounce, falling to around $4,303, marking the largest single-day percentage drop since October 21.

Minutes from the Federal Reserve’s December meeting showed rare and persistent divisions among policymakers over whether to ease policy further, although the overall stance remains cautiously accommodative. At the December 9–10 policy meeting, the Fed cut the federal funds rate target range by 25 basis points to 3.5%–3.75%, marking the third consecutive rate cut. Most officials believe that rate cuts can help stabilize the labor market amid slowing job growth and a rising unemployment rate. Even so, policymakers who supported the cut emphasized that it represents a “delicate balance” between inflation and employment risks, with some members originally favoring keeping rates unchanged.

During the meeting, several officials dissented—some arguing for no change, while others advocated a larger cut. Such pronounced divisions, appearing for a second consecutive meeting, are relatively rare in Fed history. Among the six policymakers opposing the rate cut were two voting FOMC members, who expressed concern that progress toward the inflation target has stalled. They also highlighted that a large amount of labor market and inflation data will be released before the next meeting, which will be crucial in determining the future policy path. The minutes further noted that the 43-day U.S. government shutdown led to missing economic data, adding to uncertainty in policymaking.

Based on current assessments, the Fed expects only one possible rate cut in 2026 and is inclined to keep rates unchanged at the January 27–28 meeting, unless inflation falls sharply or unemployment rises more than expected. This policy outlook has a dual impact on the gold market. On one hand, consecutive rate cuts have reduced the opportunity cost of holding gold, helping drive prices up about 66% year to date. On the other hand, internal divisions and caution toward further easing have cooled expectations for 2026 rate cuts to around 50 basis points, thereby limiting gold’s short-term upside. Nevertheless, the minutes also suggest that if future economic or employment data deteriorate significantly, the Fed may be forced to accelerate easing, which would provide medium- to long-term support for gold. In addition, the Fed reiterated that its short-term U.S. Treasury purchase operations are purely technical measures aimed at maintaining adequate bank reserves and stabilizing the federal funds rate, rather than signaling a policy shift—helping anchor market expectations and prevent excessive volatility in gold prices.

From a daily chart perspective, the trend shows gold pulling back from highs, having broken below the 5-day moving average and hovering near the previous upward trendline. The RSI has fallen to 35.6, entering oversold territory, suggesting the short-term decline may slow. However, the MACD has formed a bearish crossover with expanding negative momentum bars, indicating that downside pressure remains. While the KDJ has produced a bullish crossover at low levels—signaling a potential short-term rebound—the downward-opening Bollinger Bands and price action near the lower band are likely to cap rebound potential.

On the 4-hour chart, prices are moving within a descending channel after breaking below the lower boundary of the prior uptrend. Resistance is evident in the $4380–4400 range, while $4300–4320 forms a short-term support zone. A rebound in RSI from low levels, together with a KDJ bullish crossover, suggests some short-term rebound momentum, though overall strength remains limited.

On the 1-hour chart, the market is consolidating sideways. The 5- and 10-period moving averages are intertwined, indicating unclear direction. The MACD has formed a bullish crossover below the zero line, but with weak positive momentum bars, further confirming the lack of strong rebound strength.

The Bitop Market Analysis Team believes the recent pullback is mainly due to holiday sentiment in Europe and the U.S., as investors chose to lock in profits after a prolonged rally. As a result, Tuesday did not see a continuation of the breakdown-driven decline, but instead showed a clear spike followed by a pullback. With the New Year approaching, gold is expected to trade mainly within a narrow range. Intraday rebounds are viewed as corrective retests; if rebounds fail to break resistance and prices effectively fall below $4300, the market is likely to resume its downward trend. For short-term trading, the team recommends primarily selling on rebounds, supplemented by buying on pullbacks. Key short-term resistance lies at $4382–4405, while key short-term support is seen at $4300–4280.

Disclaimer: None of the information contained here constitutes an offer (or solicitation of an offer) to buy or sell any currency, product or financial instrument, to make any investment, or to participate in any particular trading strategy.