The gold price, specifically XAU/USD, is staying relatively steady close to the $2,610 mark as Christmas Eve approaches. One of the main factors influencing this is the continued strengthening of the US Dollar. Market participants are adjusting to a more cautious stance regarding US interest rates, and this backdrop is playing a role in keeping gold in its current position.
The Federal Reserve has signaled that there will be fewer rate cuts next year. This indication has reduced the upward pressure on gold. Fed officials expect the federal funds rate to reach 3.9% by the end of 2025, and this shift comes because of a slower disinflation process as well as the uncertainty surrounding President-elect Donald Trump’s policies on immigration, trade, and taxes.
Treasury Yields and Gold’s Decline
The fresh Summary of Economic Projections (SEP) has led to a rise in US Treasury yields. These yields are often seen as the opportunity cost of holding gold, which is another reason for the metal’s recent decline.
Upcoming Data and Its Impact
As the market keeps an eye on these developments, there are some important data releases to watch out for. Initial Jobless Claims data, which is set to be released this Thursday, could bring in some volatility for the US Dollar. Additionally, the Nonfarm Payrolls figures for December, expected in the first week of January, will be closely examined. The labor market plays a crucial role in shaping the Federal Reserve’s decisions, and any surprises in these figures could have an impact on gold as well. Despite these upcoming events, gold is still under pressure and hasn’t been able to break out of its current range.
XAU/USD Technical Outlook
Technical Challenges for Gold
From a technical perspective, XAU/USD is facing significant difficulties. The price remains in negative territory, and the indicators are showing weak momentum. Right now, the pair is testing the 100-day Simple Moving Average (SMA) support at $2,610. This level has been really important for gold in recent months.
If the price sustains a break below this level, it could mean there’s more potential for it to go down. On the other hand, if there’s a bounce, it might face resistance in the $2,650 – $2,670 range. Traders will be watching this support level very closely to see if there are any signs of a reversal or if the bearish trend will continue.
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