- Gold futures struggle below $5,000 amid Fed uncertainty and receding geopolitical fears.
- The consolidation in gold prices is likely as the dollar recovers while safe-haven flows keep a floor under precious metal.
- The markets await FOMC meeting minutes along with US Q4 GDP and the Core PCE Index to find fresh impetus.
After a sharp drop of 2-3% to the $4,850 area, gold futures have recovered losses in Wednesday’s Asian session. Buyers keep testing the $5,000 psychological level. The recent rise is likely a technical correction and a repositioning ahead of important US macroeconomic events, not the start of a new trend. Near-month futures have dropped sharply, but short covering and dip-buying are helping in the short term.
The key driver is still what markets perceive the Federal Reserve will do. Markets are pricing in about 75 basis points of rate cuts over the course of the year, as US inflation data has been softer and officials like Fed Governor Michael Barr and Chicago Fed President Austan Goolsbee have made repeated dovish comments. Both suggest that more easing is probable if inflation continues to move toward the 2% target. This bias toward eventual rate cuts makes the medium-term bullish case for non-yielding gold, as real yields decline and the dollar weakens over time.
Another headwind for gold is a stronger US dollar. The recovering Dollar Index (DXY) keeps dollar-denominated bullion on the defensive and makes each time the dollar gets stronger a resistance point for gold futures. It becomes harder for the market to keep rallying, even when expectations for rate cuts get more dovish.
In the short term, though, the policy picture is unclear, which increases the odds of consolidation rather than a big rally. The Fed doesn’t have to cut rates right away, as the job market is strong and the economy is growing steadily. This tension in expectations keeps gold stuck around $5,000. Rallies encourage investors to sell leveraged longs rather than chase momentum. The FOMC minutes and upcoming US data (Goods Orders, Q4 2025 GDP, and Core PCE) are important for determining the timing and pace of easing.
The situation is mixed regarding geopolitics and liquidity. Diplomatic talks on Iran and Ukraine have lowered immediate headline risk and calmed safe-haven flows driven by fear, but the lack of real agreements keeps a floor under precious metals.
At the same time, the US and Asia have less liquidity due to the holidays, making prices more sensitive to speculative and algorithmic flows and increasing intraday volatility. Gold is likely to trade in a range-bound, level-to-level manner until liquidity returns to normal and a clearer macroeconomic signal emerges. Buyers will be drawn to dips toward recent lows, and the $5,000 region will act as a cap.