In-depth Analysis of the Gold Market: The Volatile Dilemma Amid Policy Games and Future Breakout Directions

I. Core Influencing Factors: The Threefold Tug-of-War Between Bulls and Bears

1. Divergence in Federal Reserve Policy: The Key Variable for Market Trends

The core contradiction in the current gold market centers on the Federal Reserve’s FOMC meeting on December 10-11. According to CME FedWatch data, there is an 87.2% probability of a 25 basis point rate cut at this meeting. New York Fed President Williams has sent dovish signals, and San Francisco Fed President Daly has also explicitly supported a December rate cut. However, differences remain—three regional Fed presidents with voting rights insist inflation is still high and maintain a hawkish stance. The market’s focus is not only on the upcoming rate cut itself but even more so on the 2026 interest rate dot plot, which will be the core factor determining the year-end tone for gold prices.

2. Geopolitical Risks on the Rise: Key Support for Safe-Haven Premium

The Global Geopolitical Risk Index has climbed to 125 points, with multiple risk events continuously driving up demand for gold as a safe haven. The Russia-Ukraine conflict remains unresolved, and mounting tensions in the Middle East have caused Red Sea shipping insurance premiums to surge by 35%. Some traders have begun using gold to settle payments. Additionally, news of the US planning land strikes on drug trafficking groups has further increased market uncertainty, with gold’s safe-haven appeal continuing to attract capital.

3. Divergent Capital Flows: A Potential Driver of Market Volatility

On the capital side, there is a clear confrontation between bulls and bears. Sovereign funds continue to increase holdings, providing solid support for gold prices. However, short-term speculative capital is choosing to exit at high levels—Bridgewater Associates has cleared its gold positions, and the SPDR Gold ETF has posted a net reduction of 1.71 tons. Meanwhile, open interest in London gold has risen to 450,000 contracts. This polarized capital structure at high levels is further amplifying volatility risks in the market.

II. Technical Analysis: Directional Choices Amid Consolidation

1. Narrow Range Fluctuations Dominate; Volatility Constrained by Expectations

London gold is in a repeated tug-of-war around the key $4,200 level. As of 10:10 AM today, the quoted price is $4,201, with intraday volatility less than 0.3%. Open interest remains high, sharply contrasting with low volatility. Ahead of the Fed’s policy decision, bulls lack momentum for a sustained breakout, while central bank gold purchases prevent bears from acting rashly. With both sides at a stalemate, a unilateral trend is unlikely in the short term, and the market will most likely maintain a “narrow range fluctuation + pulse-like volatility” pattern.

2. Contradictory Technical Indicators; Bulls and Bears Temporarily Balanced

- The daily chart remains in a bullish alignment, with the MACD golden cross continuing, highlighting a strong medium-to-long-term foundation;
- The KDJ indicator remains in the overbought zone, suggesting short-term technical correction pressure and making gold prices prone to pullbacks after surging;
- The Bollinger Bands are narrowing and moving averages are converging, further confirming that the market is currently in a consolidation phase, awaiting a directional choice.

3. Key Levels Clearly Defined; Support and Resistance Bound the Volatility Range

1. Key Resistance: $4,250-$4,260. This area is a strong resistance zone that previous rallies have repeatedly failed to break through, $4,25...