Gold (XAU/USD) Price Reclaims $4200/oz Handle. Are Bulls Ready for a Test of $4300/oz?

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Gold prices are currently on a bullish rally having experienced a significant pullback and support test on Tuesday. The precious metal appears to have regained its shine as bulls returned to the party pushing prices to a high of $4240/oz in the early part of the US session.

The current rally and supporting Gold’s valuation is the aggressive market expectation of impending monetary policy easing by the US Federal Reserve. Current forecasts indicate an 88% probability of a US interest rate cut in December, with broader market consensus pricing in approximately 90 basis points of easing by the end of 2026.

Market participants are expecting the FED to start cutting rates despite mixed rhetoric. The expectations do keep the US Dollar (USD) under broad pressure and force US Treasury yields to drift lower.

US data continues to show subtle signs of weakness which further supports the rate cut narrative. US Manufacturing PMI data released this week showed that the ISM Manufacturing PMI dropped to 48.2%, marking the ninth straight month below 50.which is contractionary territory.

In addition, the pace of new customer orders is slowing down, and the number of people employed continues to shrink. Although the upward pressure on prices (inflation) is easing, the overall economic trends are still worrying. These underlying numbers suggest that the risk of an economic downturn, or recession, is increasing. This growing recession risk is good news for precious metals like gold and silver, as it supports the case for their price to rise significantly over the long term (a long-term bullish case).

There is also the case of the next Federal Reserve policymaker and comments by US officials around the Federal Reserve.The more comments we hear from members of the Trump administration regarding the Fed, the more likely market participants are to question the Fed's independence. This is another factor which could continue to support Gold prices in the short and medium term.

We now know we will not receive any more official reports on job creation or consumer prices before the Federal Reserve's important policy meeting on December 10th. However, the Fed's preferred measure of inflation, called the PCE data, is scheduled to be released later this week.

Recent reports on consumer and producer prices (the CPI and PPI reports) showed softer-than-expected inflation. This suggests that the impact of government tariffs on overall price increases has been minimal that they are making a lot of noise but not actually causing prices to spike (more bark than bite). Therefore, analysts expect this week's core PCE deflator (the official inflation gauge the Fed watches most closely) for September to also reflect this trend of lower, easing inflation.

Geopolitical risk remains an area of focus as the Trump administration seems dead set on confrontation and a potential regime change in Venezuela. Irrespective of whether market participants agree with such a move or not is irrelevant but what is relevant is the risks this poses.

Such risks usually have a tendency to lead to an increase in safe haven demand. Thus Gold prices could be a huge beneficiary if the US decides to mount a direct attack on Venezuela and is worth monitoring.

Looking at the four-hour chart below, the technical picture is strong.

Price action looks favorable with a trendline retest yesterday before a bullish continuation reinforcing the narrative for bullish price action moving forward.

The period-14 RSI also shows signs that momentum remains bullish. A test of the 50 level also occurred yesterday with the RSI bouncing off this level, another sign of bullish momentum remaining in play.

The next move for the precious metal will be an intriguing one.

A four-hour candle close above the $4228/oz handle is needed if bulls are to push on. A rejection here could lead to another trendline test and bring the 50 and 100-day MAs into focus which rest at 4166 and 4136 respectively.

Gold (XAU/USD) Four-Hour Chart, December 3, 2025

Looking at OANDA client sentiment data and market participants are Long on Gold with 74% of traders net-long. I prefer to take a contrarian view toward crowd sentiment and thus the fact that the majority of traders are net-long suggests that Gold prices could continue to slide in the near-term.

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