Analysis of variables intensifying after gold surpasses $4,300 driven by Fed rate cut scenario

Continued Strength in Spot Gold, Near $4,315 in Early Asian Trading

XAU/USD is showing strong support above the psychological level of $4,300, recording around $4,315 in early Asian hours on Monday. Following the Federal Reserve(Fed)'s decision last week to cut rates by 25 basis points, bringing the target range to 3.50%–3.75%, the market is reassessing the possibility of additional cuts next year, which is supporting the spot price.

Outlook for Easing Cycle as a Structural Support for Gold

The holding cost of gold, which yields no interest, is directly linked to the interest rate environment. When rates are in a downward trend, the opportunity cost diminishes, naturally increasing demand for gold. At the same time, as global uncertainties deepen, gold’s role as a safe-haven asset is also strengthening, creating a dual supply-demand advantage that drives the spot price.

Escalating Geopolitical Risks: Bondi Beach Incident and Risk Aversion

The shooting incident(at Bondi Beach, Sydney, Australia, which resulted in at least 16 deaths and 40 injuries), immediately impacted global investor sentiment. Australian Prime Minister Anthony Albanese’s mention of a “targeted attack” acts as a geopolitical risk signal, and this increased instability is manifesting as a rise in safe-haven demand.

Internal Divergence at the Fed to Drive Short-term Volatility

There are differing opinions among Fed policymakers regarding the rate path. Chicago Fed President Charles Evans stated that in the context of data delays caused by the government shutdown in October–November, “it was preferable to wait for sufficient data before making additional cuts.” Meanwhile, Cleveland Fed President Loretta Mester insists that maintaining the current rate level is essential to curb inflation.

Dollar Rebound Scenario: Hidden Threats to Gold Weakness

This week, comments from Fed Governor Stephen Miran and New York Fed President John Williams are attracting attention because if their tone turns out to be more hawkish than expected, the dollar(USD) could rebound. A strengthening dollar would put downward pressure on dollar-denominated assets, including spot gold. The upcoming US October non-farm payrolls (NFP) report(NFP) scheduled for Tuesday is also expected to be a key variable in determining short-term direction.