Introduction
As the global markets settle into December, gold prices are holding firm near US $4,238 per ounce. Despite some daily fluctuations, gold remains resilient, maintaining a steady upward trajectory thanks to a confluence of macroeconomic factors. Recent geopolitical developments, paired with growing expectations for U.S. monetary easing, have propelled gold to six-week highs, continuing its upward momentum from November.
Gold's year-to-date performance remains robust, benefiting from its perennial role as a safe-haven asset amidst political turmoil and economic uncertainty. Investors are watching closely, particularly as the market digests the latest developments in the U.S. Federal Reserve's policy path and ongoing global geopolitical tensions.
Principal Factors That Influence Gold Prices
1. Trump’s Fed Chair Appointment and Market Implications
Trump: Trump views on the appointment of the next Federal Reserve Chairman of the US have emerged as one of the dominant factors in determining the current gold markets. Trump has made it official that in the near future, he will appoint someone who prefers lower interest rates. Trump’s statements are giving very supportive news for gold as it prefers low-interest rates and makes very clear profits in such environments. Speculations about former economic advisor Kevin Hassett are at peaks due to this news.
Market participants are now nominating that in 2026, the Fed may go for more easy money and may decrease interest rates. Further assistance to gold markets comes from this fact that real bond yields are compressed due to this news, and the cost of money in gold compared to US dollars keeps on rising and makes it more worth it to invest in gold and face less cost due to this purchasing power decrease.
2. Geopolitical Tensions and Safe-Haven Demand
Trump's belligerent foreign policy posture, especially due to Venezuela and Conflict between China and Russia, has created conditions conducive to geopolitical risks. Trump has imposed Venezuela's airspace blockade and continued attacks on the regimes in Latin America and added considerable risk premium to the markets.
Geopolitical risk factors are causing investors to insulate or hedge their exposure to possible disruptions in oil and trade channels, meaning that investors are trending towards gold as a harbinger of safe havens. Conditions conducive to the role of gold as the international risk-proof portfolio hedge have further solidified due to rising geo-political tensions in the Middle Eastern regions and between the US and China, further adding to supply chain risks and stability in the economy.
3. Key Economic Data and the Fed's Policy Path
Data that will be released later today and is closely eyed for insight into the state of the economy include the ISM Manufacturing PMI and ISM Prices Index. If the PMI disappoints and comes in lower than expected, it may mean that the economy is slowing down, and this will further reinforce expectations for an impending Fed rate cut in the coming months.
However, a stronger-than-expected reading may mean that inflationary pressures are still present, and this may cap upside in gold in the coming days. Currently, markets are already factoring in a very high likelihood of a Fed rate cut in December, at 88% chance of happening, as indicated by the CME FedWatch Tool. This is very important for any further upside in gold, as lower rates are generally conducive to higher gold prices due to decreased opportunity cost of gold.
Some of the technical analysis considerations include:
Gold’s technical analysis is still positive, with gold currently ranging above the important level of $4,200. It seem that the momentum is going to move higher and much stronger if the price break out of the patten shown on the char below. The important resistance and support levels are also shown on the chart.
Gold trading chart: XTB
Conclusion: Market Sentiment & Trading Options
Gold is trending upward due to the influence of geopolitical risk, dovish Fed expectations, and inflation protection buying. In light of the current level of geopolitical risks and Trump’s statements about dovish Fed expectations, gold is expected to trend higher due to these factors. However, it is important for traders to watch the current ISM
Manufacturing PMI and ISM Prices Index announcements in the US markets, as this data will have direct effects on sentiments and gold markets. If weaker figures emerge, it may create further rally conditions for gold, whereas better figures may create less enthusiasm in the markets. Until then, $4,300 is the next level of resistance for gold markets.