Gold Eyes $4,270 as Fed Dovishness Fuels Bullish Momentum

Gold Market Analysis: Fed Rate Decision and Global Impacts

Key Developments

Gold prices have pulled back from recent highs but remain near $4,200 an ounce, with investors bracing for the Federal Reserve's upcoming rate decision. A 25-basis-point cut is now seen as highly likely, supported by weak U.S. job market data and a softer dollar. Analysts suggest a dovish Fed could push gold above $4,270 per ounce in the short term.

Asian markets have traded with caution ahead of the key rate decision, with mixed performances in Japan, China, and India. The Nikkei 225 slipped below 50,500 amid weaker household spending and bond yield pressures, while India's SENSEX edged higher following the Reserve Bank of India's rate cut. Global bond yields and geopolitical tensions continue to weigh on investor sentiment.

Japan's economy showed a mixed performance in October, with a sharp decline in the current account surplus and a contraction in household spending. However, leading economic indicators pointed to an improving outlook, and foreign reserves hit a multi-year high. The Bank of Japan is expected to address rate policy in the coming weeks, adding to the volatility in Asian equities.

How Markets Reacted

Gold prices have traded within a tight range ahead of the Fed's meeting, with technical indicators pointing to potential for a breakout. The Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) have both signaled bullish momentum, suggesting a possible push above key resistance levels according to technical analysis, suggesting a possible push above key resistance levels. Analysts remain watchful for a test of $4,270, where a sustained move could trigger a broader rally toward $4,400.

Asian equity markets reacted cautiously to the buildup of uncertainty. The Nikkei 225 and Topix Index fell modestly on Friday, reversing earlier gains as investors focused on the U.S. data pipeline and the potential for aggressive rate cuts. China's main indices showed limited direction, with markets reacting to policy signals from high-level meetings. India's SENSEX extended gains after the Reserve Bank of India cut rates, boosting investor sentiment in the region.

What Analysts Are Watching

Investors and analysts are closely monitoring the U.S. PCE price index, a key inflation gauge that will be released ahead of the Fed meeting. A weaker-than-expected report would strengthen the case for a rate cut, likely pushing gold higher. Kevin Hassett has voiced support for a 25-basis-point reduction, aligning with market expectations.

The geopolitical risk premium remains a tailwind for gold. Recent developments in the Ukraine conflict and broader global tensions have added to the case for precious metals as a safe-haven asset. In India, gold prices held near ₹1.30 lakh per 10 grams, with domestic and global factors converging to support the metal.

Looking ahead, the World Gold Council has outlined three possible macroeconomic scenarios for 2026, each with different implications for gold prices. A "shallow slip" scenario, with slower U.S. growth and a weaker dollar, could see gold rise 5–15%. A more severe downturn, or "doom loop," could result in a 15–30% increase. Conversely, a reflationary environment driven by stronger growth and higher rates could lead to a 5–20% correction according to research.

For investors, the coming weeks will be critical. A decisive move above $4,270 could reignite the bullish momentum that carried gold to record highs in 2025. However, without a clear breakout, the market may remain rangebound until the Fed provides more clarity on its policy path.