Market sentiment has shifted dramatically, with traders now pricing in a nearly 90% probability that the U.S. Federal Reserve will cut interest rates as soon as December. This expectation is triggering a pronounced decline in the U.S. dollar, creating a powerful tailwind for gold. As the precious metal holds firm above the psychologically critical $4,200 level, investors are asking whether this sets the stage for a final surge to challenge its all-time peak.

A Weakening Dollar Ignites Demand

The primary engine for gold’s recent strength is the dollar’s sharp retreat. The U.S. Dollar Index has broken below the key threshold of 99 points, a significant downturn that effectively makes dollar-denominated gold cheaper for international buyers. This dynamic is fueling increased demand. The market’s logic is straightforward: anticipated rate cuts by the Fed diminish the appeal of yield-bearing assets like bonds, enhancing the relative attractiveness of non-yielding gold.

Further speculation is emerging from Washington. The potential appointment of Kevin Hassett, known for his pro-growth stance, as the successor to Fed Chair Jerome Powell is being interpreted by markets as a signal that accommodative monetary policy could persist. This perception adds another layer of support for higher gold prices.

Technical Indicators Point to Potential Breakout

The chart setup is becoming increasingly tense, with several key levels in focus.

Should investors sell immediately? Or is it worth buying Gold?

• Critical Support: The $4,200 level has been successfully tested as a floor.
• Immediate Hurdle: The next significant resistance sits at the December interim high of $4,264.
• Primary Target: A sustained move higher would target the October record high near $4,380.
• Downside Buffer: Substantial support lies at the 55-day moving average, currently around $4,027.

The bulls maintain momentum as long as the $4,200 support holds. A decisive and sustained breakout above $4,264 would likely clear a direct path toward the record. The immediate question is whether incoming economic data can provide the necessary catalyst.

All Eyes on U.S. Labor Market Data

Today’s release of weekly U.S. initial jobless claims data holds the key to the next major move. Should the figures reveal further softening in the labor market, expectations for imminent Fed rate cuts would intensify, potentially catapulting gold toward the $4,250 zone. With a Relative Strength Index (RSI) reading of 57.7, the metal is not yet in overbought territory, suggesting there is room for further advancement.

Gold is in a coiled position, merely a few percentage points from its historic peak. It is buoyed by an exceptionally weak dollar and aggressive market pricing for rate cuts. The coming trading sessions will determine whether the current consolidation phase erupts into a full-blown breakout toward new all-time highs.

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