GOLD Price Analysis – Dec 23, 2024

Daily Price Outlook

Gold prices (XAU/USD) have had a quiet start to the week, moving slowly around $2,627, with a trading range between $2,617.59 and $2,629.30. This sluggishness comes as the US Dollar (USD) remains strong, just below its two-year peak, putting pressure on gold.

At the same time, global geopolitical uncertainties, like the ongoing Russia-Ukraine conflict and tensions in the Middle East, continue to drive demand for gold as a safe-haven asset.

The Federal Reserve's recent stance, signaling slower rate cuts in 2025, has kept US Treasury yields high, which dampens gold’s potential for major gains. On top of that, a positive mood in global stock markets is capping any significant rise in gold prices.

As the week progresses, traders are closely watching the release of the Conference Board's Consumer Confidence Index, hoping it will offer more clarity on the gold market’s short-term direction.

US Dollar Weakens on Softer Inflation Data, Supporting Gold Prices Amid Stable Economic Growth

On the US front, the broad-based US Dollar (USD) remain subdued after the release of the Personal Consumption Expenditures (PCE) Price Index data on Friday.

The softer inflation numbers for November have raised expectations that the Federal Reserve (Fed) will continue easing its policies in 2025.

According to the CME FedWatch tool, there is now a more than 90% chance that the Fed will keep interest rates unchanged at 4.25%-4.50% in January.

The core PCE inflation, which is the Fed’s preferred inflation measure, rose by 2.8% year-over-year, slightly below the expected 2.9%.

Monthly core inflation also grew by just 0.1%, less than the anticipated 0.2%, signaling a slowdown in inflationary pressures.

In addition to the PCE data, other economic indicators also had an impact. The US GDP grew by 3.1% in the third quarter, beating expectations and showing stronger-than-expected economic growth.

Initial Jobless Claims fell to 220,000, better than the forecast of 230,000, indicating a stable labor market.

Despite these positive figures, inflation remains a key concern, with the yearly change in the PCE Price Index rising to 2.4%.

The Fed's recent signal to slow down rate cuts in 2025 caused US Treasury yields to reach their highest level in over six months, adding pressure to the USD.

Therefore, the softer inflation data and the Fed’s likely decision to keep rates unchanged support gold prices by reducing the likelihood of aggressive rate hikes.

However, higher Treasury yields and stable economic growth may limit gold’s potential for significant gains.

GOLD (XAU/USD) – Technical Analysis

Gold (XAU/USD) is trading at $2,630.70, up 0.27% as it consolidates gains following a steady recovery. The price action remains supported by the $2,620.64 pivot point, while the 50 EMA at $2,622.84 provides dynamic support, reinforcing the bullish sentiment.

The immediate resistance lies at $2,642.56, aligning with the first target for short-term buyers. A breakout above this level could propel gold toward the next resistance at $2,658.33, with a further push targeting $2,674.87.

On the downside, immediate support rests at $2,607.53, with additional layers at $2,593.83 and $2,583.93 providing a safety net for bulls.

The RSI at 60 indicates moderate bullish momentum, but the market requires a decisive move above $2,642.56 to maintain the uptrend.

The broader outlook is cautiously optimistic as geopolitical risks and USD fluctuations continue to shape market sentiment.

Traders are eyeing the upcoming resistance zones, as breaking through these levels could spark accelerated gains.

On the flip side, a breach below $2,620.64 may trigger a pullback, with downside risks increasing if prices dip below the $2,607.53 support.

Gold's technical setup favors buying opportunities above $2,626, with a take-profit target of $2,642 and a stop-loss at $2,614.

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