Gold’s pricing seems to be holding steady near $2,611, as the financial market begins adjusting its expectations regarding the United States’ interest rates. The US dollar, meanwhile, continues to demonstrate strength, buoyed by the notion that the Federal Reserve will approach rate cuts more conservatively next year. Federal Reserve officials have recently suggested that the anticipated rate cuts may be fewer than initially expected, aiming for the federal funds rate to hit approximately 3.9% by the end of 2025. This adjustment comes amidst a less robust disinflationary trend and lingering uncertainties over President-elect Donald Trump’s policies on immigration, trade, and taxes.
The updated Summary of Economic Protections (SEP) has triggered a rise in US Treasury yields, often interpreted as the opportunity cost of holding onto gold, a significant factor in the metal’s recent decline.
As these developments unfold, the upcoming Initial Jobless Claims data, scheduled for release this Thursday, might stir some volatility for the US dollar. Moreover, the December Nonfarm Payrolls figures, expected in early January, will attract close attention since the labor market is crucial in informing the Federal Reserve’s decisions. Yet, in the midst of these economic events, gold continues to feel the pressure, struggling to escape its current trading range.
XAU/USD Technical Outlook
From a technical standpoint, XAU/USD encounters substantial challenges. The current indicators signal weak momentum, and the price is submerged in negative territory. It is currently testing the 100-day Simple Moving Average (SMA) support at $2,610—a pivotal level for gold over the last few months. Should there be a sustained drop below this mark, it could lead to further declines. On the upside, any recovery attempts are likely to confront resistance around the $2,650 to $2,670 range. Hence, traders are keeping a close eye on this support level for any indications of either a reversal or a continuation of the prevailing bearish trend.
In summary, while the market processes new economic data and adjusts to the evolving rate outlook, gold’s position remains somewhat precarious, underscoring the delicate interplay between macroeconomic factors and technical signals.
