Gold prices (XAU/USD) continues to struggle, failing to rise above $2,625. Recent strong US economic data has strengthened the US Dollar, making it harder for Gold to recover.
Why is Gold Dropping?
Gold prices fell after the Federal Reserve shared its latest outlook. While the Fed reduced interest rates as expected, it raised its growth and inflation predictions. Chairman Jerome Powell also sounded more confident about the economy. This boosted the US Dollar and hurt Gold prices.
Key US Data Impacting Gold Prices
In the third quarter of 2024, the US economy expanded by 3.1%, surpassing the earlier forecast of 2.8%. Unemployment claims also dropped to 220,000 from 242,000, better than expected.
These positive signs show a strong economy, which supports the US Dollar. When the Dollar gets stronger, Gold prices often drop.
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Federal Reserve Actions
The Federal Reserve cut rates by 25 basis points, moving them to a range of 4.25%-4.50%. However, the Fed now expects only two rate cuts in 2025, instead of four.
Inflation estimates for next year rose to 2.5% from 2.1%, reflecting stronger economic growth. The Fed also expects the unemployment rate to stay lower than previously forecast.
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What’s Next for Gold?
Gold has failed to rise above $2,625, which is now a resistance level. If prices drop below $2,580, they could fall further toward $2,540.
To break out of this downward trend, Gold needs to climb above $2,630 and reach $2,650 to ease selling pressure.
Conclusion
Gold prices remain under pressure due to a strong US Dollar and robust economic data. For now, it seems difficult for Gold to recover beyond $2,620.
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