Gold eyes $3,500, yen drifts to 159 as central banks diverge

I expect gold to make an attempt to reach the $3,500 support level next week. The Fed is currently at 4.00% after the October hold, but December is almost fully priced for a hike—likely 25bp to 4.25%, with a small chance of 50bp . That hawkish backdrop keeps real yields and the dollar firm, which is the main weight on gold. Spot gold was last around $3,883 after touching a one-year low . The critical near-term level is $3,840; a decisive break there opens the path toward $3,750 and then the $3,500 area . I don't think $3,500 gets hit in one straight move, but I do expect the market to probe in that direction. FOMC minutes midweek could add pressure if they reinforce the tightening bias . Any bounce toward $3,950–$4,000 should be treated as a chance to lighten up, not to buy. The $3,500 target is my base case for the week's direction, not a guarantee it closes there.

Japan's PM is Sanae Takaichi, and her term has been defined by a weak yen and pressure on the budget. The swing from 164 to 154 to 160 is two forces at work: the July peak was stopped by joint Japan-US intervention, the September dip came on BOJ hike expectations, and the return to 160 reflects the still-wide Fed-BOJ rate gap and Japan's trade deficit. Nikkei rose in H1 on weak yen and exporter earnings, then fell in H2 on the AI selloff and fears of BOJ tightening. For next week, I expect USDJPY to drift down toward 159 by Friday. A retest of 160 likely comes later, once the market digests the data and refocuses on rate differentials. Don't buy dollar-yen right at 160—intervention risk there is real.