On Thursday, spot gold briefly climbed to 4,110 USD per ounce, but as the US Dollar Index strengthened sharply, the rally was heavily capped and gold retreated about 0.88% to hover near 4,070 USD per ounce.

Recent price action suggests that gold is shifting into a more consolidative phase. After testing resistance near 4,150 USD in the previous session, the strong rebound that started from the psychological 4,000 USD level stalled abruptly, forming a sharp contrast to the dollar’s powerful surge.

Looking back at the rally that started in February last year, gold has already gone through two notable consolidation phases that lasted around two and four months respectively. Against that backdrop, the fact that the current pullback has only lasted about one month suggests that the bulls may not yet be fully prepared to push prices to fresh highs.

On Tuesday, gold extended its decline to precisely test the 4,000 USD psychological level, which also aligns with the rising trendline connecting the swing lows in October and November — a key area of technical confluence. This critical support area sparked strong buying interest on Wednesday, and the rebound extended into early trade on Thursday.

Although the minutes of the Fed’s October meeting revealed deep divisions among policymakers, with more officials now expecting no further rate hikes for the remainder of the year, markets had already largely priced out the prospect of a December rate cut beforehand. As concerns over US equities eased, gold also found some support.

However, the nonfarm payrolls report for October will no longer be released, meaning the Fed will have less data to guide its policy decisions. This adds an extra layer of uncertainty and could complicate any attempt to cut rates in December.

Overall, as the market gradually digests the reduced expectations for a December Fed rate cut, precious metals are starting to stabilize. Supported by long-term themes such as de-dollarisation, the broader uptrend in precious metals remains intact.

Technical Outlook:

On the 4-hour chart, gold has pulled back after running into resistance, yet the MACD signal lines and histogram are converging around the zero line. From a longer-term perspective, the current pattern closely resembles a consolidation phase within a strong, established uptrend.

Even if prices do not immediately break out to the upside in the short term, this kind of sideways consolidation is still likely to be a bullish continuation pattern, allowing the market to accumulate fresh upside momentum for the next move higher.