Gold prices (XAU/USD) are seeing a significant uptick of 0.4% in Friday’s EU session, nearing $4,230. Market fundamentals indicate that gold prices have been stuck in a narrow band. At the bottom of this four trading day range, they have been as low as $4,164 and at the top, as high as $4,265. While there is renewed interest from many central banks—especially those of emerging economies such as China, India, and Turkey—there is nonetheless a rocky stability. All of these nations have been on a gold buying spree.
The 20-day Exponential Moving Average (EMA) is currently at $4,147.96. Gold prices have spent close to two months finding support above this line, making for a bullish short-term pattern for those trading the market. The 14-day Relative Strength Index (RSI) has perked up after dipping toward overbought territory at the 60.00 level. Such a recovery would signal that the gold market is still in a strong uptrend, as long as the RSI doesn’t fall below this line.
Market Trends and Technical Analysis
During Friday’s European trading hours, gold prices were about $4,190. The trend is unambiguously bullish and the prevailing uptrend line is firmly in place. This trend began from the bottom of the sub $4k low of $3,933.90 on October 28. This trend line is very important because it serves as support around $4,110. Analysts suggest that if gold manages to sustain its position above this trend line, it could pave the way for further advances.
If the daily close drops below this trend line, watch for a deeper pullback. Such a move would likely hit the important psychological level of $4,000. Traders should expect any pullbacks to the 20-day EMA to be well supported. This is doubly true as long as its slope continues to point up, providing speculative dip-buying support across the entire stock market.
Over the last 12 months, central banks have increasingly been adding to their gold reserves. They maxed out at an incredible 1,136 tonnes, adding it roughly $70 billion in value last year alone. This increase represents the largest annual purchase of gold in record history. It further demonstrates a strategic shift in monetary policy as institutions look to shore up their reserves in the face of increasing global economic uncertainties.
Central Bank Strategies and Economic Outlook
It is emerging economies that are driving much of this demand. China, India, and Turkey have all seen their central banks quickly increase their respective reserves as monetary policy tools. This trend reflects a realization of gold as a key hedge against inflation and currency volatility.
In fact the inflation index that the Federal Reserve tries to monitor has continued to exceed the Fed’s paltry 2% inflation target for months on end. Consequently, there is increasing expectation for a 25 bps rate cut in 2026. Investors would do well to focus on shifts in the Federal Reserve’s monetary policy signaling. What these changes mean for gold price Gold prices going forward could be greatly influenced by these significant changes.
It is clear that Fed officials intend to take a very hawkish view towards monetary policy. They need to be able to react to continuing high inflationary pressures, despite the potential for lower interest rates. Not to mention that such measures would make volatility in the financial markets that much worse. This change would increase global demand for gold as a safe-haven asset.
The Future of Gold Prices
The shifting trading environment indicates that gold prices are likely to hold strong even if they pull back in the near term. The 20-day EMA is still positively sloped, adding to the appetite to buy dips. At the same time, central bank actions continue to show their long-term commitment to keeping gold as their top reserve asset.
Contractual arrangements are unsettled and market participants are glued to the price spreads. First they are highly tuned into key support/resistance levels, and secondly to technical indicators. If gold prices can manage to stay above the noted trend line, they will acquire upside momentum. We hope this momentum continues to produce other positive advances in the next few weeks.