Core Viewpoint - The recent rebound in London gold prices, surpassing the psychological threshold of $4000 per ounce, is attributed to market expectations of a Federal Reserve interest rate cut and the potential end of quantitative tightening, which has led to renewed buying interest in gold [1][3][4]. Group 1: Federal Reserve Actions - The Federal Reserve is expected to announce a 25 basis point rate cut, with a probability of 99.9% according to the CME Fedwatch tool [3]. - There is anticipation that the Fed will end its quantitative tightening, which involves reducing its balance sheet of approximately $6.6 trillion [3][4]. - Market analysts suggest that a shift towards a more dovish monetary policy from the Fed will support gold prices, as it may weaken the dollar and lower the holding costs of gold [4][7]. Group 2: Gold Market Dynamics - Since September, London gold has seen a strong increase of approximately 29%, reaching a historical high of $4381 per ounce on October 20, before experiencing a significant sell-off [4]. - The recent drop below $4000 per ounce was not unexpected, but this level remains a critical psychological barrier for investors [5]. - Analysts indicate that if gold stabilizes around the $4000 mark, it may attract buyers back into the market [5]. Group 3: Long-term Outlook for Gold - Despite short-term pressures, the long-term outlook for gold remains positive, driven by ongoing concerns about inflation and currency devaluation [6][7]. - Historical trends show that gold typically performs well in the early stages of a rate-cutting cycle, and current economic indicators suggest further rate cuts may occur [7]. - The World Gold Council reports that while gold ETF inflows have been strong, total holdings are still below historical peaks, indicating potential for future growth in gold investments [7][9].