Daily Price Outlook
Gold price (XAU/USD) failed to continue its recent upward trend and turned bearish around the 2,659 level, hitting an intra-day low of 2,655.
This decline is mainly driven by expectations that the Federal Reserve may slow down its interest rate cuts, which has helped the US Dollar stay strong near its two-year high.
On the flip side, the geopolitical tensions and concerns over a potential trade war continue to offer support to gold, which is often seen as a safe-haven asset in times of uncertainty.
Investors seem to be holding back from making major moves, possibly waiting for the release of the US Nonfarm Payrolls (NFP) report on Friday.
Moreover, speeches from key Federal Reserve members scheduled for later today could offer additional clues about the central bank’s stance on future interest rate moves.
These factors make the short-term outlook for gold uncertain, and its price could be influenced by both the US economic data and any developments in global geopolitical tensions.
US Dollar Strengthens Amid Hawkish Fed Signals and Rising Treasury Yields, Pressuring Gold
On the US front, the broad-based US Dollar has been holding strong and received support from recent hawkish comments in the Federal Open Market Committee (FOMC) Meeting Minutes and concerns about tariff plans under the incoming Trump administration.
The US Dollar has been further bolstered by rising Treasury bond yields, with the 10-year yield climbing to nearly 4.73% before easing slightly to 4.67%, while the 30-year bond approached 4.93%.
However, the FOMC Minutes from December's meeting showed that most members were in favor of a 25 basis point rate cut, but they were also cautious.
They are worried that trade and immigration policy changes could keep inflation high for longer than expected.
On the data front, US Initial Jobless Claims for the week ending January 3 dropped to 201,000, which was better than the expected 218,000.
However, the ADP Employment Change for December was 122,000, falling short of the expected 140,000.
Meanwhile, the US ISM Services PMI (a key indicator of economic activity) rose to 54.1 in November, up from 52.1, beating expectations of 53.3. However, the Prices Paid Index, which reflects inflation, increased sharply to 64.4 from 58.2.
Federal Reserve officials have expressed concerns about the pace of inflation reduction. Atlanta Fed President Raphael Bostic urged caution in policy decisions, suggesting that interest rates should remain high until inflation reaches the 2% target.
Consequently, the US Dollar's strength, rising Treasury yields, and cautious Federal Reserve stance are putting pressure on gold prices.
GOLD (XAU/USD) – Technical Analysis
Gold is trading at $2,657.43, down 0.16%, as traders digest recent price movements within a consolidation phase.
The 4-hour chart shows gold trading just above its pivot point at $2,646.10, supported by the 50 EMA at $2,636.37, suggesting near-term stability.
However, the RSI at 57 reflects neutral momentum, leaving the next directional move dependent on price action near key levels.
Immediate resistance lies at $2,670.45, with subsequent targets at $2,692.82 and $2,710.72, signaling potential upside if bullish momentum builds.
On the downside, immediate support is at $2,624.44, followed by stronger levels at $2,603.20 and $2,583.91. A break below $2,646.10 could drive bearish sentiment toward these levels, while a bounce from the pivot point may reignite upward momentum.
Traders eyeing long positions could consider a buy limit near $2,652 with a take-profit target of $2,672 and a stop-loss at $2,640.
The tight trading range suggests caution as gold remains influenced by broader market drivers, including dollar strength and geopolitical factors. Watch for a breakout above $2,670.45 or a decisive move below $2,646.10 for clearer direction.
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