GOLD Price Analysis – Dec 19, 2024

Daily Price Outlook

Gold price (XAU/USD) sustains its upward trend, rebounding strongly from a one-month low and reaching around $2,622 on Thursday’s European session.

However, the rally comes as market sentiment turns sour after the Federal Reserve’s hawkish tone on Wednesday.

Apart from this, the growing geopolitical tensions and trade war fears are pushing investors towards the safety of gold, driving its appeal as a haven asset.

At the same time, the US dollar remains steady, consolidating its post-FOMC gains at a two-year high. Notably, the Fed’s signal to slow the pace of interest rate cuts is boosting US Treasury yields, offering support to the USD. Despite these headwinds, gold remains an attractive choice for investors amid rising uncertainty.

Impact of US Economic Data, Fed's Cautious Approach, and Global Uncertainties on Gold

On the US front, the broad-based US Dollar remains strong after the Federal Reserve (Fed) delivered a cautious 25-basis point rate cut, bringing rates to 4.25%-4.50%, a two-year low.

The Fed’s latest projections, known as the ‘dot-plot,’ now show only two rate cuts in 2025, down from four predicted earlier.

During the press conference, Fed Chair Jerome Powell emphasized that the Fed remains cautious about further rate cuts as inflation stays above the 2% target.

Traders are now focusing on upcoming US data, including Initial Jobless Claims, Existing Home Sales, and the final Q3 GDP reading, which could influence the USD’s momentum.

Recent US economic data has been mixed. November Retail Sales rose 0.7%, exceeding the previous 0.5% growth, while the Retail Sales Control Group saw a slight recovery of 0.4%.

The S&P Global US Composite PMI showed improvement, rising to 56.6 in December from 54.9 earlier, driven by stronger services activity.

However, manufacturing data was less optimistic, with the PMI falling to 48.3 from 49.7, signaling continued contraction in the sector.

These indicators paint a picture of resilience in some areas of the economy but challenges in others, particularly in manufacturing.

On the flip side, China’s economy remains under pressure. Authorities plan to target 5% growth in 2025, the same as this year, amid record net outflows of $45.7 billion from its capital markets in November.

While China focuses on boosting domestic consumption, the lack of concrete fiscal support and looming US tariffs are dampening optimism.

The strong US Dollar, mixed economic data, and Fed's cautious approach to rate cuts weigh on gold's appeal as a non-yielding asset.

Meanwhile, global uncertainties like China's economic struggles and geopolitical risks support gold as a safe-haven asset.

GOLD (XAU/USD) – Technical Analysis

Gold (XAU/USD) is trading at $2,609.76, gaining 0.94% in today’s session. Despite the uptick, the metal remains below its pivot point at $2,616.77, indicating lingering bearish pressure.

The immediate resistance lies at $2,636.57, followed by stronger hurdles at $2,664.90 and $2,690.55. On the downside, immediate support is seen at $2,576.85, with subsequent supports at $2,559.53 and $2,537.25.

Technical indicators highlight mixed sentiment. The RSI at 35 reflects oversold conditions, suggesting limited downside in the near term. However, the 50 EMA at $2,665.76 positions gold below this critical moving average, signaling that bearish momentum is still dominant.

From a technical perspective, a failure to reclaim the pivot point at $2,616.77 could encourage sellers, pushing gold toward its immediate support at $2,576.85.

A break below this level would expose gold to deeper corrections toward $2,559.53 and $2,537.25. Conversely, a successful move above the pivot could trigger buying interest, targeting $2,636.57 and beyond.

Traders may look for opportunities to sell below $2,620, with potential profit-taking near $2,595 and a stop-loss set at $2,635.

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