Gold experienced sharp fluctuations last week after recording strong losses of about 5% on one day, closing the week down nearly 3% for bullion gold and 2.6% for gold futures. Spot gold closed at $4,112.1 per ounce, while futures contracts recorded $4,137.8 per ounce, amid anticipation of the upcoming decision from the U.S. Federal Reserve on October 29 regarding a reduction in the interest rate from 4.25% to 4.00%.
Constructive correction despite the decline
Despite the sharp decline, analysts noted that the technical damage to gold was limited, with prices maintaining critical support near $4,000 per ounce. This correction is viewed as an opportunity for investors to reassess their positions, especially with declining consumer sentiment according to University of Michigan data, which reduces inflationary pressures on the yellow metal.
Luqman Otunuga, market analyst at FXTM, confirmed that gold bulls have started to regain confidence after cooler-than-expected inflation data emerged, noting that the current technical picture leans slightly towards a temporary decline, with a possibility of testing the $4,000 level.
Next movement expectations
Top analysts at Saxo Bank and Pepperstone see gold still in a healthy correction phase, and the bull market is not over yet. Michael Brown from Pepperstone expects gold to trade between $4,000 and $4,400 per ounce in the near term, with risks skewed to the upside due to the ongoing growth of global government debt and increased central bank gold reserves.
Neil Welch, head of metals at Britannia Global Markets, added that the current period resembles a necessary consolidation phase after a rapid rise, emphasizing that the long-term narrative of inflation risks, strong central bank buying, and gold's role as a safe haven remains intact.
Supportive factors for investors
Ongoing geopolitical tensions and economic uncertainty, which boosts demand for gold as a safe haven.
Expectations for the US Federal Reserve to lower interest rates, which supports prices.
Strong technical support at $4,000 per ounce protects the metal from a sharp drop.
Summary
Gold is entering a necessary correction period after its significant rise this year, but the fundamental factors remain strong. The market is expected to see movements ranging between $4,000 and $4,200 before resuming the upward trend, giving investors a chance to take advantage of short-term declines.
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