Gold maintains its uptrend

26 Kasım 2025

Gold Maintains Its Uptrend as the USD Weakens and Yields Decline

Written by Linh Tran, Market Analyst at XS.com

Gold prices are entering an important phase as they are supported by multiple factors. The recent recovery in gold is not only driven by a weakening USD or declining yields, but also reflects changes in monetary policy expectations, the inflation outlook, the health of the U.S. economy, and safe-haven flows. When these factors all lean in the same direction, gold has a solid foundation to continue maintaining its short-term upward momentum.

Inflation is the key factor to watch in the coming weeks. Economic data released last week and this week show that price pressures in the U.S. are cooling significantly. Core PPI rose only 0.1%, below the forecast of 0.2%; PPI increased 0.3%, in line with expectations; and wage growth reported last week also slowed slightly. In addition, oil prices have remained lower for most of November compared to the previous month, which is another supportive factor helping ease future inflation. If next month’s CPI and PPI data continue to confirm this trend, expectations for rate cuts will strengthen, directly supporting gold.

Furthermore, data such as Retail Sales and Core Retail Sales showed increases but fell short of expectations; the Consumer Confidence Index (CB Consumer Confidence) also dropped to 88.7, significantly lower than 95.4 in the previous month. Data including the Richmond Manufacturing Index, Durable Goods Orders, and Core Durable Goods all indicate weakening compared to the previous month. The labor market is the only area that still shows stability, with Unemployment Claims at 226K. Overall, these data indicate that the economy is cooling moderately—not weak enough to trigger recession fears, but soft enough for the Fed to consider a possible rate cut in December.

Expectations that the Fed will shift toward a more dovish stance are rising rapidly, with the FedWatch tool showing that the probability of a 25-basis-point cut is above 80%. However, in December, the market will continue to receive new economic data before the rate decision takes place.

One important point to note is that gold does not necessarily need the Fed to actually cut rates; merely the expectation that the Fed will become more dovish is enough to provide short-term momentum for the metal. The two strong gains in gold recently are clear evidence: gold reacted immediately when labor data and producer inflation came in the right direction, even though policy has not yet changed.

Rising expectations of rate cuts have caused the USD and Treasury yields to weaken significantly. The decline of the DXY to 99.2 is a strong signal that the market is temporarily pulling capital out of the USD to reassess policy expectations. At the same time, the 10-year Treasury yield has dropped to around 4.06%, much lower than the nearly 4.8% earlier this year. A weaker USD makes gold more attractive to investors, while lower yields reduce the opportunity cost of holding non-yielding assets like gold. If yields fall below 4.0% or the DXY breaks below 99.0, gold may enter an accelerated bullish phase.

Additionally, geopolitical factors and safe-haven flows must also be considered. The conflict between Russia and Ukraine shows no clear progress. For now, ongoing uncertainty remains a barrier preventing institutions from aggressively selling gold. Although ETF outflows were significant in previous months, they have now stabilized. This indicates that defensive sentiment continues to persist quietly.

Overall, in the short term, gold still leans toward an upward trend. If inflation data continues to cool and the USD does not sharply reverse, gold is likely to extend toward higher levels such as 4,200 USD/oz. Conversely, if CPI or labor market data unexpectedly heat up, the Fed may be forced to send a more hawkish signal, prompting a USD rebound and a consequent correction in gold, something that would be difficult to avoid. But for now, expectations of lower inflation are dominant, consumption is weakening, production is declining, and the DXY has fallen to 99.2. The fundamental backdrop for gold is considerably stronger than just a few weeks ago. Therefore, the upward trend may continue in a cautious manner.

 

Zaid Barem / ymm