Spot Gold Breaks Below $4300 Level: In-Depth Analysis of Investment Logic

According to the latest market data, spot gold experienced its largest single-day drop since October 21 on December 29, once breaking below the key psychological level of $4300 per ounce, with an intraday low near $4300 [1]. However, as of December 31, gold prices have recovered some ground, rising to $4342.60 per ounce [0].

• Period Performance (Oct 1-Dec 31)
  : Rose from $3897.50 to $4342.60, up 11.42%
• Price Range
  : High of $4552.70 (Dec 26), Low of $3868.10 (Oct 2)
• Key Support
  : $4300 round number level
• Moving Average System
  : Current price is below the 20-day moving average ($4393.31) but still above the 50-day moving average ($4239.33)
• Short-term Trend
  : 5-day trend is downward, indicating short-term adjustment pressure remains
• Volatility
  : Daily average volatility is 1.48%, annualized volatility as high as 19.93%

This break below the $4300 level is mainly a technical correction, not a reversal of the long-term trend:

• Profit-taking pressure
  : Gold has risen over 70% in 2025, hitting all-time highs more than 50 times this year [2], accumulating a large number of profit-taking positions; the demand to take profits and exit has become the core driver of gold price decline
• Margin-driven deleveraging
  : Market analysis points out that this decline shows obvious margin-driven deleveraging characteristics [3]; against the backdrop of thin liquidity at the end of the year, volatility was significantly amplified
• Repair of extreme technical indicators
  : RSI fell from a high to 59.33, so there is no need to bear excessive overbought pressure when attacking again, which is actually beneficial to the continuation of the trend [3]

From the perspective of market behavior, investors’ logic is shifting from ‘pure speculative frenzy to reconfirmation of long-term structural supports’ [1]. This sentiment shift is healthy and helps the market evaluate gold’s long-term value more rationally.

Continuous central bank gold buying is the most solid support for gold’s investment logic:

• Gold buying intensity remains high
  : Goldman Sachs predicts that central banks will maintain an average monthly gold buying demand of 70 tons in 2026, close to the average of 66 tons in the past 12 months, which is 4 times the pre-2022 monthly average of 17 tons [4]
• Demand for reserve diversification
  : The freezing of Russian reserves in 2022 became a major turning point in emerging market reserve management; central banks around the world are accelerating the shift of reserves from the US dollar to gold [4]
• Huge potential allocation space
  : US gold ETFs account for only 0.17% of private financial portfolios, 6 basis points lower than the 2012 peak [4]; if private investors follow central banks in asset diversification, it will push gold prices further upward

• Fed rate cut expectations
  : The market generally expects the Fed to continue cutting rates in 2026, which will drive real interest rates down and reduce the opportunity cost of holding gold [2]
• Weakening US dollar trend
  : The US dollar and gold show a negative correlation of -0.5152 [0]; the general weakening of the US dollar provides support for gold

• Normalization of geopolitical risks
  : The current global geopolitical pattern shows ‘fragmentation’ characteristics; traditional geopolitical hotspots have not cooled down, and new conflict areas continue to emerge [2]
• Reassessment of safe-haven asset pricing
  : The global scale of negative-yield bonds has exceeded $20 trillion; the allocation value of traditional fixed-income assets has shrunk, and gold’s zero-coupon feature has instead become an advantage [2]

• Goldman Sachs
  : Lists gold as the top investment target in the commodity sector for 2026, predicting prices may reach $4900 per ounce; if private investors follow central banks in diversification, gold prices are likely to exceed this forecast [4]
• Average forecast of major banks
  : $4500-$4700; if the macro environment does not tighten, the upper limit may reach $5000 [2]
• World Gold Council
  : In the case of a deep recession, gold investment demand may see significant growth, and gold prices may even have the potential to break through the $5000 per ounce level [5]

• $4300-$4450 core range
  : Market participants believe that gold prices are likely to fluctuate widely in this range, repairing extreme technical indicators by exchanging time for space [1]
• Key Technical Levels
  : The lower support is at $4305-$4300; if broken, it may point to $4271 [1]; the upper resistance is at $4520; after breaking through, it is expected to retest $4550 and challenge the psychological level of $4600 [1]

1. Support factors remain solid:
   • Central bank gold buying trend is structural, not cyclical [2]
   • Rate cut expectations and declining real interest rate trends remain
   • No signs of easing geopolitical risks

2. Nature of Current Adjustment:
   • More like ‘shifting gears to refuel’ [3], not a trend reversal
   • From a technical perspective, as long as it holds $4360 and repeatedly confirms effective support, there is still room to retest $4500 above [3]

Although the long-term logic is solid, investors still need to pay close attention to the following risks:

1. Fed Policy Shift Risk:
   • If the Fed unexpectedly turns hawkish and real yields rise sharply, it will weaken gold’s upward momentum [2]
   • The current market expects more easing than tightening; if this expectation is calibrated, it may trigger a 5%-20% correction in gold prices [5]

2. Macro Economy Improving Beyond Expectations:
   • If US economic policies are effective, trade negotiations make breakthroughs, or more loose fiscal policies successfully promote economic growth, part of gold’s risk premium will fade [5]

• Core logic unchanged:
  The three major support factors (central bank gold buying, rate cut expectations, geopolitical risks) still exist; long-term allocation value remains unchanged
• Opportunity to buy on dips:
  The current technical correction provides a good entry point for long-term investors
• Watch key support:
  Focus on the $4300 level; if it stabilizes here, it will be a good opportunity to increase positions

• Range trading idea:
  Expected to fluctuate in the $4300-$4450 range in the short term; can adopt a buy low sell high strategy
• Strict stop loss:
  If it breaks below the key support of $4300, need to be alert to the risk of further retracement to $4274 [1]
• Watch catalysts:
  The Fed’s December meeting minutes will be the focus of attention, possibly providing new short-term trading logic for the market [1]

Gold mining stocks usually have a ‘leverage effect’ and often outperform gold prices themselves during gold price rises. In 2025, Zijin Mining’s stock price rose by 180% [2], and Shandong Gold, China Gold International, etc. also performed well. However, it should be noted that mining stocks are more volatile and have a higher risk-return ratio.

Spot gold breaking below the $4300 level is more of a technical adjustment than a reversal of the long-term trend. The core logic supporting the gold sector investment—continuous central bank gold buying, Fed rate cut expectations, geopolitical risks—remains solid. Institutions like Goldman Sachs are optimistic about gold prices in 2026, predicting they can reach $4900 or even higher [4].

However, investors also need to pay close attention to the two major risk factors: Fed policy shifts and macroeconomic improvement beyond expectations. In the short term, gold prices are likely to consolidate in the $4300-$4450 range, repairing technical indicators by exchanging time for space [1]. For long-term investors, the current correction may provide a good layout opportunity; for short-term traders, range trading with strict stop loss is a better strategy.

Against the backdrop of deep changes in the global monetary system and increasing uncertainty, gold as a value anchor across cycles still highlights its strategic allocation value [2].

[0] Jinling API Data - Spot Gold Price Data (GCUSD)
[1] Huitong Finance - “Gold Plunges Then Rebounds Strongly! Safe-Haven Funds Inflow, 2026 Rate Cut Expectations Support” (2025-12-30)
[2] Fortune Account - “Gold Hits New All-Time High Again, How to View the Future Logic?” (2025-12-24)
[3] Huitong Finance - “The Seemingly Dangerous Correction: Is Gold Actually 'Shifting Gears to Refuel '?” (2025-12-30)
[4] Futu Information - “Goldman Sachs: Gold Will Top ‘Commodity List’ in 2026, Bullish to $4900” (2025-12-31)
[5] FastBull - “Gold Future: Pointing to $5000 or Correcting 20%?” (2025-12-27)