Driven by the Fed's dovish stance, gold prices extended their upward momentum for a fourth consecutive trading session, breaching the $4,300 threshold and reaching a new high since October 21 during the first half of Friday's European trading session.

Following Fed Chair Jerome Powell's expression of concerns about the labor market on Wednesday, the dovish-leaning Fed should generally be constructive for risk assets. Wall Street is increasingly pricing in two or more rate cuts by the Fed in 2026.

Furthermore, gold staged a record-breaking rally in 2025, with its value doubling in less than two years. We believe that the primary catalysts driving gold's price appreciation—including central bank gold accumulation, Fed rate cuts, dollar weakness, concerns regarding Fed independence, and ETF inflows—remain fully intact, while the global macroeconomic backdrop continues to be broadly constructive for the precious metal.

According to the World Gold Council, global gold demand in the third quarter of this year also reached a record high of 1,313 metric tonnes. This surge was driven by robust investment demand, including purchases through exchange-traded funds (ETFs), gold bars and coins, as well as significant net purchases by central banks worldwide.

The robust overnight rally confirms gold’s breakout from the two-week consolidation range. Moreover, oscillators on the daily chart remain deep in positive territory, propelling Friday’s move into the $4,300 handle.

However, as institutional positions initiated at $4,345 approach profit-taking levels, a pullback is imperative. The first downside target is the $4,286 zone, where fresh basing is expected. Whether price can subsequently challenge all-time highs will depend on the resilience of that support band.

Additionally, it should be noted that—due to the asynchronous gold-silver ratio—the unfinished record-high trajectory in the silver market could continue to exert upward pressure on gold prices. Meanwhile, any short positioning predicated on a pronounced retracement in gold requires a confirmed cyclical top. Such a top has yet to manifest, warranting caution against large-scale shorting.

Trade Direction: Sell

Entry Price: 4350

Target Price: 4286

Stop Loss: 4389

Valid Until: 28 December, 2025, 23:55:00

Support: 4285/4259/4247

Resistance Levels: 4345/4358/4380

The Canadian Dollar held firm against the US Dollar on Friday, extending a multi-week advance as investors continued to reassess the evolving monetary policy landscape between the Bank of Canada (BoC) and the Federal Reserve. The USD/CAD pair traded near 1.3760 during the European session — its weakest level since mid-September — and is on track to log its third consecutive weekly decline, pressured by widespread softness in the US Dollar following the Fed’s latest rate decision.

The loonie’s outperformance this week reflects a growing conviction that Canada’s policy stance is likely to remain comparatively steady well into 2026, even as the Federal Reserve begins to cautiously unwind restrictive settings. With volatility in global FX markets tied closely to central-bank divergence, traders have been quick to rotate out of the greenback and into currencies such as the CAD that offer policy stability and resilient macro fundamentals.

The BoC opted to maintain its benchmark policy rate at 2.25%, meeting market expectations and signalling that current settings are “about the right level” given inflation’s proximity to the 2% target and continued resilience in domestic economic activity. While the decision itself was widely anticipated, investors honed in on the tone of the accompanying statement, which leaned less dovish than some had predicted.

Policymakers highlighted stable demand, a tightening labour market relative to earlier in the year, and improving business sentiment—factors that collectively support the view that Canada’s economy has avoided the deeper slowdown feared during the summer.

Major domestic banks echoed this sentiment. Analysts at National Bank of Canada (NBC) wrote that they expect the BoC to hold steady through at least the first half of 2025, pushing out the expected timing of rate increases to the fourth quarter of 2026. This marks a notable shift from previous projections, which had anticipated the next tightening cycle to begin in early 2027.

NBC noted that falling unemployment coupled with persistent inflationary pressure could bring forward the timing of rate hikes. However, they warned that downside risks remain, particularly if labour-market conditions weaken or if renewed trade uncertainty arises from the 2026 review of the US-Mexico-Canada Agreement (USMCA).

Markets are now laser-focused on next Monday’s Consumer Price Index (CPI) report. A hotter-than-expected print could increase speculation that the BoC may turn incrementally hawkish in 2025, while a softer reading would reinforce the narrative of prolonged stability.

In contrast, the Federal Reserve lowered interest rates by 25 basis points this week, bringing the target range for the federal funds rate to 3.50%–3.75%. Policymakers acknowledged that both sides of their dual mandate — inflation and employment — remain delicately balanced, arguing that incoming data will determine the pace of future easing.

While the decision aligned with market forecasts, the tone from officials was less hawkish than markets had anticipated, helping push the US Dollar lower across the board.

Chicago Fed President Austan Goolsbee, who dissented against the cut, argued that policymakers should have waited for more clarity on inflation before easing further. Although he remains optimistic that rates are likely to fall meaningfully over the next year, he warned against front-loading reductions given the inflation volatility experienced over the past several years. Goolsbee highlighted that most economic indicators — including job creation and wage growth — point to moderate cooling rather than a sharp downturn.

The divergence between a steady BoC and a Fed easing cycle remains one of the primary catalysts behind the downward momentum in USD/CAD.

USD/CAD continued its sharp slide during Friday’s intraday session, testing the 1.3755 support zone — a level previously identified as a critical bearish target. This decline coincides with increasingly negative signals across momentum indicators. Despite dipping into oversold territory on the Relative Strength Index (RSI), selling pressure remains intact, though the oversold condition may trigger intermittent corrective rebounds.

The broader technical structure continues to favour the bears. Price action remains comfortably below the 50-day Exponential Moving Average (EMA50), reinforcing the presence of sustained downside momentum. A well-defined descending trend line also provides additional resistance overhead, reducing the probability of a meaningful recovery in the near term.

Should bears maintain control, a clean break below 1.3750 could expose the next support zone near 1.3600. Conversely, any temporary bullish corrections are expected to remain capped unless the pair climbs back above 1.3840 — an area that currently aligns with dynamic resistance tied to the EMA50.

SELL USDCAD

ENTRY PRICE: 1.3760

STOP LOSS: 1.3870

TAKE PROFIT: 1.3600

Gold (XAU/USD) continued its bullish momentum on Friday, pushing toward record territory as traders recalibrate expectations for the Federal Reserve’s monetary policy in 2026. At the time of writing, XAU/USD is hovering around $4,337, just shy of its all-time peak of $4,381 recorded on October 20. This advance comes in the wake of Wednesday’s 25 basis points (bps) rate cut by the Fed, the third reduction this year, which has reignited speculation that the U.S. central bank could deliver additional easing next year.

The latest leg higher allowed Gold to decisively break out of a two-week consolidation range, signaling renewed appetite for the safe-haven asset amid a backdrop of dovish monetary signals. While the Fed refrained from providing explicit forward guidance, Chair Jerome Powell’s comments underscored a cautious approach: near-term rate hikes are unlikely, and future policy will remain data-dependent. Powell highlighted both upside and downside risks to the U.S. economy, reinforcing a nuanced stance that markets interpreted as more dovish than expected.

This divergence between market expectations and the Fed’s official projections has fueled aggressive positioning in favor of further easing. Traders are now pricing in the likelihood of two additional rate cuts in 2026, even as the Fed’s latest dot plot indicates only one cut. Analysts suggest that this gap between expectations and official guidance could sustain heightened volatility for Gold, especially given its sensitivity to U.S. interest rate differentials.

Beyond monetary policy, geopolitical tensions continue to underpin bullion demand. Concerns over persistent global uncertainties, including ongoing conflicts and trade disruptions, have maintained a steady risk premium on Gold, supporting its ascent even as equities and other risk assets show mixed performance.

From a technical perspective, XAU/USD’s momentum has strengthened in intraday trading, breaking above the key resistance level of $4,300. This level, previously highlighted as a potential target in our analysis, now acts as a short-term support, reinforced by the 50-day exponential moving average (EMA50). On the minor trend line scale, Gold continues to track higher, suggesting that bullish sentiment remains intact.

However, the Relative Strength Index (RSI) has entered overbought territory, indicating that the pace of gains may be slowing and that short-term pullbacks could occur. Traders should watch for consolidation above the $4,300 threshold, as sustained trading at or above this level would increase the likelihood of a test of the all-time high at $4,381. Conversely, failure to maintain momentum could trigger a retest of immediate support zones near $4,250 and $4,220.

BUY GOLD

ENTRY PRICE: 4330

STOP LOSS: 4300

TAKE PROFIT: 4381

In its latest assessment, the International Energy Agency (IEA) lowered its supply growth forecast for 2026 and narrowed the estimated supply–demand gap, providing fundamental support to oil prices. Meanwhile, production in some OPEC+ countries has declined due to equipment failures and sanctions, further reducing available exports and heightening market sensitivity to supply tightness.

However, there are clear reasons for the poor performance this week: any positive signal from the Russia–Ukraine peace talks will quickly suppress risk premiums and reduce upward momentum in oil prices. In addition, enforcement actions by the U.S. and other nations against Venezuelan oil shipments have escalated recently (including reports of U.S. seizure of oil tankers). As a result, short-term concerns over potential supply disruptions are raised, and market volatility is magnified. In reality, when supply risks alternate with "positive" news from peace talks, WTI tends to oscillate within a narrow range as it repeatedly tests levels.

Inventory data and seasonal factors remain the usual anchors for price direction. According to the EIA's weekly report, sustained large draws (recent changes have been limited) are absent, which further reinforces downside pressure on prices.

Regarding the daily chart, recent WTI candlestick movements have remained under pressure below the 60-day moving average, failing to break through it effectively on multiple occasions. This has strengthened the bearish momentum in the market. Furthermore, after breaking below the November 25th low and the psychological level of $57.00, the downside of WTI is enlarged, adding the chance of testing the lower support between $56.00 and $55.00.

Trading direction: Sell

Entry price: 57.80

Target price: 55.20

Stop loss: 59.10

Valid Until: December 26, 2025, 23:00:00

Support: 56.00/55.00

Resistance: 58.01/58.86

Markets widely expect the European Central Bank (ECB) to have halted rate cuts, which could support the euro in the near term. ECB President Christine Lagarde reiterated that the current monetary policy stance is appropriate. Meanwhile, ECB policymakers François Villeroy de Galhau and Gediminas Šimkus stated there is no reason for immediate rate cuts or hikes, as the current stance is considered "good." Lagarde noted that, given the resilience shown by the Eurozone economy amid external trade pressures, the new projections to be released by the ECB next week might revise growth forecasts upward. Speaking at an event hosted by the Financial Times on the 10th, she pointed out that the Eurozone has withstood U.S. tariff measures better than expected. She emphasized that the EU has not retaliated against these measures, the euro exchange rate remains stable, and the labor market stays robust. Based on this, following the previous upward revision, she expects growth forecasts could be raised again at the December policy meeting to reflect the positive momentum. Besides, as hawkish remarks from policymakers increase, money markets are rapidly reassessing the ECB's policy path. Traders no longer expect any rate cuts next year; current market pricing shows the probability of a 25-basis-point hike next year rises from 30% on Tuesday to 40%. Swap market data also indicates traders see a 50% chance of a rate hike by the end of 2026, while completely ruling out any cuts. This fundamental shift reflects growing policymaker confidence that borrowing costs can remain unchanged or even rise in the foreseeable future. The shift is pushing global bond yields higher and signals investors' view that the ECB's focus is shifting from stimulating the economy to consolidating inflation control achievements and adapting to economic recovery.

The Fed concluded its two-day meeting on Wednesday, deciding to cut rates by 25 basis points — the third rate cut this year. Fed officials were divided over lowering rates to the 3.50%–3.75% range, with both supporters and opponents expressing dissent. Traders viewed Fed Chair Jerome Powell's speech as less hawkish than expected, creating some selling pressure on the USD/EUR exchange rate. In addition, concerns about the Fed's independence under President Trump have intensified, potentially adding downward pressure on the dollar. Wall Street still sees White House economic adviser Kevin Hassett as the most likely candidate for the next Fed chair. Moreover, analysts believe Hassett could push for further rate cuts. Traders will closely watch speeches by Fed officials later in the day, including Cleveland Fed President Beth Hammack and Chicago Fed President Austan Goolsbee. Any hawkish comments from Fed officials could help limit the dollar's decline in the short term.

Based on the four-hour chart, Bollinger Bands and moving averages are diverging upward. After the MACD formed a golden cross signal, EUR/USD has been rising strongly along the Bollinger Upper Band, indicating the bullish trend remains intact. RSI stands at 69, showing strong bullish sentiment, and the price is likely to test round-number levels and recent highs around 1.18 and 1.192. Regarding the weekly chart, Bollinger Bands are narrowing, the EMA12 is flattening, and the MACD and signal lines are near the zero axis. All these suggest that a trend reversal could occur at any time. If the MACD forms a golden cross, the price will likely break above 1.20. RSI is at 60, reflecting optimistic market sentiment; as long as EUR/USD does not fall effectively below EMA12, the bullish trend will persist. In the short term, buying at lows is recommended.

Trading direction: Buy

Entry price: 1.166

Target price: 1.2

Stop loss: 1.15

Support: 1.166/1.16/1.15

Resistance: 1.18/1.192/1.2

The Canadian dollar benefits from the Bank of Canada's (BOC) hawkish signals, indicating the end of the rate-cutting cycle. BOC Governor Tiff Macklem stated on Wednesday that the current interest rate level is appropriate and supportive of economic growth through structural transformation. This stance diverges sharply from that of the Federal Reserve and underscores the negative outlook for the USDCAD currency pair. Meanwhile, crude oil prices plummeted to their lowest levels since October 21, potentially curbing further gains in the commodity-linked Canadian dollar and helping to limit its depreciation. Data released on Thursday showed that Canada recorded a trade surplus of CAD153 million in September, significantly surpassing market expectations of a trade deficit. This marked Canada's first monthly trade surplus since January 2025 and elevated the U.S.-Canada trade balance to its highest level of the year. Statistics Canada reported a 6.3% increase in total exports for the month, reaching CAD64.23 billion, reversing August’s 3.2% decline. Out of 11 major product categories, 9 experienced export growth, with metal and non-metal mineral products, as well as aircraft and transportation equipment and parts, each increasing by over 20%. In physical terms, September exports grew by 4.1%, while imports declined by 4.1%, totaling CAD64.08 billion.

U.S. Department of Labor data indicates that initial unemployment claims increased by 44,000 to a total of 236,000 last week, marking the largest single-week rise since July 2021. Despite the uptick, the four-week moving average slightly rose to 216,750, suggesting that the labor market remains broadly stable. Analysts interpret this spike as primarily driven by seasonal fluctuations typical at year-end rather than a sign of significant weakness in employment conditions. Recent layoffs have not notably impacted initial claims, partly because affected employees may still be receiving severance benefits or have found alternative employment. The Federal Reserve has recently cut interest rates by 25 basis points, lowering the target range to 3.50%–3.75%, and acknowledges downside risks to the labor market, though employment remains resilient. The third-quarter trade deficit narrowed to US$52.8 billion, the lowest since 2020, driven partly by export growth. The Atlanta Fed projects annualized GDP growth of 3.5% for the third quarter, despite delays in official statistics due to Congressional shutdowns. Looking ahead, the Federal Reserve maintains an optimistic outlook for the U.S. economy through 2026, expecting economic growth to rise to 2.3%, inflation to decline to 2.4%, and the unemployment rate to stabilize around 4.4%. Chair Powell indicated that productivity gains related to artificial intelligence will support economic resilience in the future. Despite ongoing concerns over inflation and housing affordability, the Fed hints at a potential pause in rate cuts in the near term, maintaining a cautious monetary policy stance.

In the 1D timeframe, the price has broken below the EMA200 and is moving along the lower Bollinger Band, indicating a high probability of further decline towards the previous low around 1.373. Following a MACD death cross, both the MACD line and signal line have fallen below the zero-axis, signaling a transition into a bearish trend. The RSI is at 28, entering oversold territory, suggesting the short-term downtrend is ongoing. In the 1M timeframe, Bollinger Bands are converging narrowly, and SMAs are tightening. After the MACD death cross, the MACD line and signal line are attempting to re-cross the zero-axis but remain some distance away, implying the correction phase is still in progress. Support levels are identified near the EMA50 and the lower Bollinger Band at approximately 1.362 and 1.32, respectively. The RSI stands at 49, reflecting a market in a state of neutrality awaiting further direction. Therefore, it is recommended to go short before going long.

Trading Direction: Buy

Entry Price: 1.37

Target Price: 1.42

Stop Loss: 1.357

Support: 1.373, 1.37, 1.357

Resistance: 1.414, 1.42, 1.44