Daily Price Outlook
Gold (XAU/USD) continued its upward trend, reaching a high of $2,675, fueled by reports that President-elect Donald Trump’s economic advisers are considering a gradual increase in tariffs to avoid inflation spikes.
This news prompted a slight pullback in US Treasury bond yields, lending support to gold, a non-yielding asset. However, despite the boost, the precious metal's upward momentum remains capped, hindered by the Federal Reserve's hawkish stance on interest rates.
On the other hand, the previously released robust US Nonfarm Payrolls (NFP) report from Friday reinforced the Fed’s outlook, fueling expectations for a slower pace of interest rate cuts in the US. Consequently, the US Dollar (USD) found support, stalling its recent decline after hitting a two-year peak on Monday.
US Labor Market Data and Federal Reserve Outlook
On the data front, the NFP report for December showed a strong increase of 256,000 jobs, significantly exceeding market expectations of 160,000 and surpassing the revised November figure.
This has further solidified expectations for a more gradual pace of rate cuts, as emphasized by several Federal Reserve officials.
Kansas Fed President Jeffrey Schmid noted that most of the Fed’s targets have been met, suggesting that any future rate cuts will be slow and data-dependent.
In other developments, China’s central bank pledged to support the Chinese Yuan, and the People's Bank of China (PBOC) raised the macro-prudential adjustment parameter for cross-border financing.
Meanwhile, inflation in the US, as measured by the TD-MI Inflation Gauge, saw a significant acceleration, climbing by 0.6% month-over-month in December, reinforcing concerns about inflation pressures.
Therefore, the strong NFP report and expectations of slower rate cuts from the Fed support the US Dollar and Treasury yields, limiting gold's upside potential.
Meanwhile, rising US inflation concerns may pressure gold as a non-yielding asset, reducing its appeal.
As traders await the upcoming US Producer Price Index (PPI) report, the market remains in wait-and-see mode for further economic data and developments that could influence the direction of gold and broader markets.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is trading at $2,669.19, up 0.22%, as the metal sustains modest upward momentum, driven by a retreat in U.S. Treasury bond yields. The price remains above the critical pivot point at $2,687.13, signaling a cautiously bullish sentiment.
Immediate resistance stands at $2,696.72, with higher targets at $2,710.98 and $2,724.66. On the downside, key support levels are at $2,645.00, followed by $2,627.99 and $2,614.89, providing strong safety nets for potential corrections.
The 50-day EMA at $2,657.96 underscores short-term support, confirming that the broader trend remains upward. However, gold's momentum is tempered by the Federal Reserve's hawkish policy outlook and steady U.S. bond yields, which cap significant price gains.
A sustained break above $2,696.72 could pave the way for higher levels, while a drop below $2,687.13 may trigger selling pressure, potentially testing lower supports.
The Relative Strength Index (RSI) signals neutral territory, suggesting limited immediate momentum but scope for a directional breakout. Traders should monitor the $2,687.13 pivot closely; holding above it supports bullish continuation, while a breach could indicate bearish pressure.
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