GOLD Price Analysis – Dec 25, 2024
Daily Price Outlook
Gold prices have remained resilient around $2,611 during the European trading session, despite the growing strength of the US Dollar. The metal finds support from a cautious outlook on US interest rates, with investors recalibrating their expectations for 2025.
The Federal Reserve’s guidance for slower rate cuts next year has been a key factor driving market sentiment. Amid this, gold has managed to hold its ground as traders navigate a mixed economic landscape shaped by inflation concerns and geopolitical uncertainty.
US Dollar Strengthens, But Gold Holds Ground
The US Dollar has rebounded following a sharp sell-off, largely due to the Federal Reserve’s more conservative stance on rate cuts. While the Fed has adjusted its rate-cut expectations for 2025, signaling that only two rate cuts are likely next year, the broader outlook for the dollar remains firm.
The US Dollar Index (DXY) has stayed above 108.00, supported by the Fed’s projection for a more gradual approach to easing, with the federal funds rate expected to reach 3.9% by the end of 2025.
For gold, this strengthening dollar hasn’t led to major declines. Gold tends to have an inverse relationship with the US Dollar, but the precious metal’s resilience can be attributed to investors seeking a safe haven amid inflationary pressures and uncertain global economic conditions. As the Fed manages inflation slowly, traders are adjusting their positions with gold as a protective asset.
Fed's Slower Rate Cuts Create a Stable Environment
The Fed's decision to reduce the pace of rate cuts reflects ongoing inflation concerns and uncertainties surrounding the future direction of US economic policies.
The latest data points to a slower-than-expected disinflation process, while broader economic forecasts remain cautious. As a result, market participants have adjusted their expectations, resulting in a more stable environment for gold.
At the same time, soft US economic data, including weaker-than-expected durable goods orders and a decline in the US Consumer Confidence Index, has tempered inflation worries, further supporting gold prices.
Investors will continue to keep a close eye on the Fed’s moves, particularly its stance on inflation and interest rates.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is currently trading at $2,616.87, up by 0.16%, and consolidating within a narrow range. The price is hovering just above the pivot point of $2,610.27, indicating potential bullish movement if the price breaks above this level.
Immediate resistance is at $2,633.24, followed by $2,651.64 and $2,664.89, marking key upside targets for a continuation of the bullish trend. On the downside, support is located at $2,588.03, with further levels at $2,573.39 and $2,556.29, providing potential buffers against a bearish reversal.
The 50-day Exponential Moving Average (EMA) at $2,612.15 is also supporting the price, reinforcing the potential for upward movement.
The Relative Strength Index (RSI) is at 50, signaling neutral momentum, with no clear trend direction. This suggests that gold is currently in a consolidation phase, and the market will likely remain range-bound until a decisive breakout occurs.
Traders should focus on the pivot point and the resistance levels to determine whether a bullish or bearish trend will emerge.
In conclusion, if gold maintains momentum above $2,610.27, it could target higher levels, with the immediate focus on $2,633.24. However, a failure to hold above the key support at $2,588.03 could trigger a retracement toward the lower support zones.
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