GOLD Price Analysis – Dec 27, 2024
Daily Price Outlook
Gold prices (XAU/USD) extended their bearish trend, trading under pressure around the 2,629 level and reaching an intraday low of 2,628.
The decline can be attributed to a strengthening US Dollar (USD), bolstered by rising expectations of fewer interest rate cuts by the US Federal Reserve (Fed).
In its December meeting, the Fed reduced rates by a quarter point and revised its 2025 outlook, projecting only two rate cuts instead of the previously anticipated four. Despite the bearish momentum, ongoing geopolitical tensions continue to provide some support for the precious metal's value.
Impact of Stronger US Dollar and Fed's Hawkish Outlook on Gold Prices
On the US front, the broad-based US Dollar (USD) is gaining strength due to growing expectations that the Federal Reserve (Fed) will cut interest rates less aggressively.
During its December meeting, the Fed reduced rates by a modest quarter point and revised its 2025 forecast, now projecting just two rate cuts instead of the previously expected four. This hawkish outlook has provided strong support to the USD, making it more attractive to investors and putting pressure on gold prices.
The US Dollar Index (DXY), which tracks the value of the USD against six major currencies, is currently trading above 108.00, just below its highest level since November 2022.
However, the potential for further upside in the USD could be limited, as 2-year and 10-year yields on US Treasury bonds remain relatively low at 4.32% and 4.57%, respectively.
This could cap the Greenback’s strength and offer some support to gold, which remains sensitive to moves in the USD and interest rates.
Therefore, the strengthening US Dollar, driven by a more hawkish Fed outlook, pressures gold prices as investors favor the USD.
However, subdued US Treasury yields may limit further USD gains, providing some support for gold, which remains sensitive to currency moves.
GOLD (XAU/USD) – Technical Analysis
Gold is trading at $2,635.20, up 0.04% on the day, reflecting continued consolidation around its pivot point of $2,632.02.
The 4-hour chart highlights a cautiously bullish tone as the price remains supported above the 50-day EMA at $2,620, with the Relative Strength Index (RSI) at 60, indicating moderate bullish momentum.
Immediate resistance is positioned at $2,650.06, followed by key levels at $2,664.89 and $2,678.42. A break above $2,650.06 could signal further upside, with the potential to test the upper resistance zones.
Conversely, immediate support lies at $2,607.94, with deeper safety nets at $2,593.70 and $2,577.23 if bearish momentum re-emerges.
Gold’s recent price action indicates a stable upward trend, supported by the 50-day EMA. The technical setup suggests buying opportunities above $2,632, targeting $2,650, while a break below $2,620 could trigger bearish sentiment.
Traders should monitor resistance levels closely, as a decisive move above $2,650 may strengthen the bullish outlook.
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