Core Viewpoint - The gold market is facing potential volatility due to a combination of factors including the upcoming Federal Reserve interest rate decision, a decrease in central bank gold purchases, and concerning technical indicators that suggest a possible price drop. Group 1: Federal Reserve Impact - The Federal Reserve is expected to announce a 25 basis point rate cut, but the focus will be on the "dot plot" indicating future rate paths, which may show a reduction in expected cuts from four to two by 2025 [3] - A signal of pausing rate cuts could lead to a rapid rebound in the dollar index, negatively impacting gold prices, as historical data shows that shifts in Fed policy are detrimental to gold [3] Group 2: Central Bank Purchases - Central bank gold purchases have significantly decreased, with the People's Bank of China adding only 3,000 ounces in October and November, marking the lowest increase in 13 months [4] - Global central bank gold purchases have dropped from an average of 80 tons per month at the beginning of the year to below 50 tons, indicating a reluctance to buy at current high prices [4] Group 3: Technical Indicators - The Relative Strength Index (RSI) for gold has remained above 80 for three consecutive weeks, indicating an overbought condition, with historical patterns suggesting a potential average decline of 15% following such signals [6] - There is a divergence between gold prices reaching new highs while momentum indicators decline, which has historically led to price corrections [6] Group 4: Market Scenarios - Scenario 1: If the Fed signals continued rate cuts into 2026, gold prices could break through the resistance level of $4,260, potentially reaching $4,300-$4,350, with a probability of 40% [7] - Scenario 2: If the dot plot indicates a pause in the rate cut cycle, gold prices may quickly drop below the support level of $4,150, potentially reaching the $4,100-$4,050 range, with a probability of 60% [9] Group 5: Institutional and Retail Investor Behavior - The largest gold ETF, SPDR, has seen a continuous reduction in holdings for 12 days, with a total outflow exceeding 30 tons, while hedge funds have reduced their net long positions to the lowest level of 2023 [10] - In contrast, retail investors are still actively purchasing gold, with significant demand observed in locations like Sydney, where long queues have formed for gold purchases [10] Group 6: Consumer Sentiment and Market Dynamics - The price of domestic gold jewelry has risen from 980 yuan per gram to 1,328 yuan per gram since 2025, while the buyback price is only 941 yuan per gram, leading some consumers to sell their old gold [13] - Historical data indicates that significant price drops often follow periods of rising prices, with the current situation resembling past market bubbles [13] Group 7: Investment Strategies - Investors are advised to adopt a dollar-cost averaging strategy for gold bars, limiting gold investments to no more than 10% of household financial assets, and to avoid leveraged products due to increased risks [15] - It is recommended to prioritize gold purchases priced by weight and to be cautious of "all-inclusive" pricing strategies that may inflate costs [14][16]