On Wednesday, December 26, we believe that increased market expectations for Federal Reserve interest rate cuts, coupled with heightened geopolitical tensions stimulating safe-haven buying, jointly propelled the rise in gold prices, setting new historical highs again. Short-term technical indicators also suggest gold has the potential for further gains. Therefore, regarding trading strategies, we advised focusing on the support level below at $4470, followed by $4430, and monitoring the breakthrough situation at the key resistance level of $4500. A successful upward breakout could open up further room for gains towards the $4600 level.
Looking at the subsequent price action, after the Asian session opened on Wednesday, gold rose directly and quickly broke through the resistance at the $4500 level, refreshing its historical high to $4525. After encountering resistance, the price experienced a sharp intra-session decline during the Asian session, falling to $4471 where it found support, failing to hold above the $4500 level. Subsequently, the gold price rebounded and tested the resistance at $4500 multiple times but failed to achieve a decisive breakout. During the US trading session, it continued to decline, refreshing the daily low to $4448. The price rebounded before the market close, ultimately forming a bearish doji candlestick on the daily chart.
Wolfinance star analyst believes that gold hitting new historical highs again on Wednesday was primarily driven by expectations for rate cuts and safe-haven buying. Regarding news, earlier market expectations suggested the Fed might only cut rates once in 2026. However, following the Fed's dovish tilt in December, the Fed Chair's comments highlighting significant downside risks to the labor market and a desire not to suppress job growth sparked speculation about the possibility of two rate cuts in 2026. Subsequently released US Non-Farm Payrolls and CPI data showing clear cooling in employment and inflation further fueled market expectations for Fed rate cuts. Additionally, recent geopolitical tensions, including the ongoing Russia-Ukraine conflict, Middle East instability, and escalating friction between the US and Venezuela, contributed. While gold's sustained rise is driven by rate cut expectations and safe-haven demand, Wednesday's price action saw a pullback from highs. This was attributed to profit-taking by some long positions ahead of the Christmas holiday market closure on Thursday, following three consecutive days of record highs, which intensified short-term selling pressure and led to the price decline.
On the daily chart, gold has set new historical highs for three consecutive days. Although it experienced a pullback from highs on Wednesday, this does not alter the overall upward trend. Key support levels below can be watched near Wednesday's pullback low around $4450, followed by Tuesday's pullback low at $4430. Resistance levels above can be watched at the key $4500 level, which gold tested and faced resistance at multiple times during Tuesday's rally and again during Wednesday's rebound attempts after the pullback. A break above this level would bring Wednesday's historical high of $4525 into focus. The 5-day moving average and MACD indicator maintain a bullish golden cross pattern pointing upwards, while the KDJ and RSI indicators show their golden crosses starting to curve downwards. Short-term technicals still indicate the bulls hold the advantage, but there is a need for consolidation after the consecutive surges.
Intraday gold reference: Expectations for rate cuts and safe-haven buying drove gold to continuously refresh historical highs before Christmas. Although the price pulled back from highs on Wednesday, the overall upward trend remains intact. Trading strategy is suggested to adopt a range-trading approach, with support levels to watch at $4450 and $4430, and resistance levels to watch at $4500 and $4525.
