GOLD Price Analysis – Dec 24, 2024
Daily Price Outlook
Gold (XAU/USD) has managed to defy the strong US dollar, maintaining its upward trend around the 2,618 level on the day.
This resilience is largely due to rising geopolitical tensions and concerns about a potential trade war, which have pushed investors toward gold as a safe-haven asset.
In addition, recent statements from the Federal Reserve indicating a slower pace of interest rate cuts in 2025 have bolstered the US dollar, keeping it near a two-year high.
This strengthening of the dollar is likely to support US bond yields, which in turn could limit further upside for gold.
Looking ahead, gold is supported by external uncertainties, the continued strength of the US dollar and the Fed's cautious stance on rate cuts may prevent significant gains for gold in the short term.
Investors should stay alert to shifts in both the geopolitical landscape and US monetary policy, as these will play a key role in determining gold's next move.
Mixed Economic Outlook and Strong US Dollar Weigh on Gold's Upside Potential
On the US front, the broad-based US dollar has been flashing green after a sharp sell-off, following signals from the Federal Reserve (Fed) that fewer interest rate cuts are expected next year.
This comes amid a slowdown in the disinflation process. However, the latest soft US PCE data have eased inflation concerns, creating a mixed outlook for the economy.
Markets now expect a nearly 93% chance that the Fed will keep rates unchanged at 4.25%–4.50% in January.
Despite this, US Durable Goods Orders for November fell more than expected, dropping by 1.1%, much worse than the projected 0.4% decline.
Meanwhile, the US Consumer Confidence Index also dropped in December, falling by 8.1 points to 104.7, showing that optimism among households has weakened.
Concerns over President-elect Trump’s economic policies, particularly the potential rise in living costs due to tariffs, have contributed to this dip.
Furthermore, the Fed’s projections suggest fewer rate cuts in 2025, reflecting caution due to ongoing inflation pressures.
Cleveland Fed President Beth Hammack indicated that rates should remain steady until inflation shows signs of returning to the 2% target.
Chicago Fed President Austan Goolsbee also revised his 2025 rate cut projection, now expecting fewer reductions.
Therefore, the mixed economic outlook, with fewer rate cuts expected and concerns over inflation, may limit gold's upside potential. A strong US dollar and steady interest rates reduce gold's appeal as a safe-haven asset, potentially capping its price growth.
Geopolitical Tensions Drive Investors Towards Gold as a Safe-Haven Asset
On the geopolitical front, tensions remain high as the Israel Defense Forces (IDF) reported that sirens were sounded in central and southern Israel after intercepting a projectile fired from Yemen.
This comes as Israeli forces continue their attacks in the northern Gaza region, which has been under siege. The situation in Gaza remains critical, with ongoing military actions causing widespread concern.
Meanwhile, in Ukraine, Russian forces have captured two villages and are making steady progress in the Donetsk area. The conflict between Russia and Ukraine continues to escalate, with Russia strengthening its hold on key regions. In response to the situation,
US President-elect Donald Trump has urged Ukrainian President Volodymyr Zelenskyy to focus on securing peace and stability, reflecting ongoing international efforts to address the war’s impact. These developments add further uncertainty to global markets, as geopolitical tensions remain a major concern.
Hence, the ongoing geopolitical tensions in Israel and Ukraine could drive more investors towards gold as a safe-haven asset. As conflicts escalate, the demand for gold may increase, potentially pushing its price higher as investors seek stability amidst uncertainty.
GOLD (XAU/USD) – Technical Analysis
Gold prices have maintained upward momentum, trading at $2,620.17, bolstered by safe-haven demand amid geopolitical tensions and economic uncertainty.
The pivot point lies at $2,609.49, which has been a critical level for determining short-term direction. Immediate resistance is seen at $2,633.23, followed by $2,651.64 and $2,670.44, with higher targets forming in case of continued bullish pressure.
On the downside, immediate support is at $2,588.03, with further key support levels at $2,573.39 and $2,556.29.
The 50-day Exponential Moving Average (EMA) sits at $2,615.77, reinforcing the current support level near $2,610. The Relative Strength Index (RSI) is at 53, indicating a neutral market stance, with a slight bullish bias.
A break above $2,633.23 would open the door to further gains, potentially targeting the next resistance at $2,651.64. Conversely, if gold fails to hold above $2,610, it could test lower support levels, with $2,588.03 acting as a critical point of defense.
Traders should remain cautious with thin holiday liquidity, as it can amplify market moves. A sustained breach above $2,610 is likely to sustain upward momentum, while a failure to maintain support could lead to a retracement toward lower levels.
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