Gold outlook: Gold price holds near $4,000 after ceasefire agreement

Gold markets experienced notable volatility during recent trading sessions, with XAU/USD rising by 0.4% on Friday to approach $3,995 per ounce. This came after the yellow metal hit a record high near $4,060 per ounce on Wednesday. The move followed the Israel-Hamas ceasefire agreement, which eased geopolitical risks and temporarily slowed safe-haven demand for gold.

Under the first phase of the ceasefire, the Israeli army released hostages, while Hamas has 72 hours to free Israeli captives, according to BBC News. Reduced geopolitical tensions typically lead to lower flows into safe-haven assets. Nevertheless, gold’s outlook remains positive, supported by expectations of further U.S. Federal Reserve interest rate cuts in the coming months.

Fed policy and Its Impact on Gold

Comments from Federal Reserve officials, including John Williams, President of the New York Fed, and Mary Daly, President of the San Francisco Fed, signaled that additional rate cuts are likely this year, highlighting potential risks in the labor market. Daly noted that current inflation pressures are much lower than feared, providing room for more accommodative monetary policy. This scenario strengthens the appeal of non-yielding assets such as gold, as the opportunity cost of holding the metal decreases.

Technical analysis – Key levels and indicators

Technically, gold is undergoing a minor correction after reaching record highs, yet bullish momentum remains intact. The 20-day exponential moving average (EMA) near $3,834 serves as a key support level, while the ascending trendline from the August 22 low of $3,321 provides additional structural support for maintaining the uptrend.

The 14-day Relative Strength Index (RSI) remains above 60, signaling sustained bullish momentum and suggesting further upside potential in the medium term. On the upside, gold may target key resistance near $4,100, which tests buyers’ commitment and determines the sustainability of the rally. In case of a pullback, $3,900 represents the first support level, followed by the 20-day EMA near $3,834, likely to attract strong buying interest.

Gold market outlook

With continued accommodative policy from the U.S. Fed, gold is expected to maintain gains in the short to medium term, supported by improved liquidity and increased demand for non-yielding assets. The bullish scenario could see gold test $4,150 if global markets remain stable and the U.S. dollar weakens. Conversely, a bearish scenario may involve a temporary correction toward $3,900 before resuming the uptrend.

Overall, gold remains resilient near record levels, continuing to attract investors seeking protection from geopolitical risks and market volatility, while Fed rate-cut expectations position the yellow metal as a key instrument for hedging and Forex trading strategies in the near term.