Daily Price Outlook
Gold prices (XAU/USD) continue to climb, staying strong around $2,641 after touching an intra-day high of $2,621.
This bullish momentum is fueled by a mix of factors, including the US adopting looser monetary policies, ongoing geopolitical conflicts, and record-breaking gold purchases by central banks.
Meanwhile, the ongoing Middle East tensions and the Russia-Ukraine war are keeping investors drawn to gold, a reliable safe-haven asset during uncertain times.
Looking ahead, the trend seems likely to continue, especially with a World Gold Council survey hinting that central banks could ramp up their gold buying in 2025, further driving demand.
Impact of a Strong US Dollar and Federal Reserve Policy on Gold Prices
On the US front, the US Dollar Index (DXY), which measures the dollar’s value against six major currencies, has surged to multi-year highs, trading around 108.50. This strength is fueled by the Federal Reserve's hawkish stance on monetary policy.
The Fed has hinted at a cautious approach to rate cuts in 2025 due to persistent inflationary pressures and uncertainties tied to the anticipated economic policies of the incoming Trump administration.
This strong dollar presents challenges for gold prices as it typically dampens demand for the metal by making it more expensive for international buyers.
However, inflation concerns and geopolitical tensions, such as conflicts in the Middle East and Russia-Ukraine, continue to support gold as a safe-haven asset.
Moreover, a World Gold Council survey suggests that central banks may increase their gold purchases in 2025, which could offset the pressure from a stronger dollar and provide further support for gold prices in the long term.
Therefore, the strong US dollar, driven by the Fed's hawkish policy, may put pressure on gold prices by making it costlier for foreign buyers.
However, ongoing inflation concerns, geopolitical tensions, and increased central bank gold purchases could still support gold's demand.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is trading at $2,634.10, marking a 0.38% gain in the last session as bullish momentum persists. On the 4-hour chart, the pivot point at $2,639.79 serves as a critical level. Immediate resistance is positioned at $2,651.73, followed by $2,665.31.
On the downside, support levels are observed at $2,610.53, $2,593.70, and $2,577.23. A break above $2,639.79 could signal continued upside, while failure to sustain this level may invite selling pressure.
Technical indicators reflect a positive bias. The RSI at 67 approaches overbought territory, hinting at strong bullish sentiment but cautioning against possible consolidation.
Gold trades above its 50 EMA at $2,621.94, reinforcing short-term upward momentum. However, the 200 EMA at $2,639.79 aligns closely with the pivot point, underscoring its significance as a decisive threshold.
The immediate outlook suggests that a move above $2,651.73 could attract further buying, targeting $2,665.31. Conversely, a failure to hold above $2,639.79 may lead to a test of the $2,610.53 support level, potentially extending to $2,593.70. Traders are advised to monitor volume and RSI levels for clearer directional cues.
Related News
AUD/USD Price Analysis – Jan 02, 2025
JOIN LHFX TODAY
24/7 live support, lightning fast withdrawals, guaranteed safe and reliable trading platforms with a true ECN broker.