Thinking of bottom-fishing or shorting precious metals? First, understand what truly determines gold prices.

Simply put, the Federal Reserve is the biggest player in gold prices. Once hints of interest rate hikes are released, gold immediately comes under pressure; conversely, if there are indications of room for rate cuts, gold prices tend to rebound. When inflation data is high, don’t forget that gold, as an inflation hedge, often sees increased demand.

US economic data is the second layer to watch. Strong employment figures and solid economic growth usually make gold less attractive. But if the economy begins to decline and unemployment rises, safe-haven buying surges, and gold prices often move higher.

Geopolitical tensions are a short-term powder keg. Events like wars or financial crises ignite risk aversion instantly, causing short-term spikes in gold prices—this is the most direct catalyst.

Finally, don’t overlook the linkage effects. A strengthening dollar usually puts downward pressure on gold; when central banks increase gold purchases, it provides long-term support for gold prices; a sharp rise in oil prices can also boost inflation expectations, thereby lifting gold prices.

Ultimately: keeping an eye on Federal Reserve movements is fundamental, observing economic hot and cold is the direction, and sudden events are the short-term turning points.