The gold price (XAU/USD) reached a fresh one-month high during the European session on Thursday. However, it struggled to maintain momentum beyond the $2,700 mark. Expectations that the Federal Reserve (Fed) will pause its rate-cutting cycle by the end of the month strengthened the US Dollar (USD), which moved away from a one-week low seen on Wednesday. This, combined with a risk-on market sentiment, created resistance for the safe-haven precious metal.
Key Factors Impacting Gold Price Analysis
Signs of easing inflation in the US have sparked speculation that the Fed might consider further rate cuts later this year. This speculation caused a decline in US Treasury bond yields overnight, which could cap USD gains and offer some support to non-yielding assets like gold. Moreover, global uncertainties, including the implications of tariff changes and geopolitical tensions, help to stabilize gold prices.
Gold Price Details
- Gold price per ounce touched $2,700 during trading.
- Resistance is expected near the $2,715-$2,720 range.
- Support is anticipated around $2,663-$2,678 levels.
Global Developments Affecting Gold
Recent reports revealed that US President Donald Trump’s advisors are considering a gradual increase in tariffs. Simultaneously, cooler-than-expected US inflation data reinforced expectations of continued Fed policy easing, underpinning gold prices. According to the US Bureau of Labor Statistics:
- Headline CPI rose by 0.4% in December, with the annual rate at 2.9%.
- Core inflation, excluding food and energy, grew by 3.2% annually, slightly below November’s 3.3%.
These data points prompted markets to anticipate a 40-basis point rate cut by year-end, compared to 31 bps prior to the report. This scenario caused the 10-year US Treasury bond yield to retreat further from its recent highs, dragging the USD lower.
Technical Outlook for Gold
From a technical perspective, positive daily chart oscillators suggest that gold prices may attempt to breach the $2,715-$2,720 resistance zone. Breaking through this level could lead to further gains towards $2,748-$2,750. A move beyond this zone might see prices retest the all-time high near $2,790, last observed in October 2024.
On the downside, strong support lies near $2,678, followed by $2,663. A failure to hold these levels could push gold prices towards the $2,635-$2,615 range, where significant technical indicators like the 100-day Exponential Moving Average (EMA) align.
Conclusion and Market Expectations
As investors analyze the latest US economic data, including retail sales and initial jobless claims, gold prices remain poised for potential movement. The balance between easing inflation pressures and the Fed’s rate decisions will shape market dynamics in the coming weeks.
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