Gold prices dipped on Monday as holiday trading slowed momentum. Following last week’s sharp decline, the yellow metal attempts recovery but faces strong resistance between $2607.25 and $2607.35. A breakout above $2629.13 is possible, yet higher trading volumes are crucial, which might not occur until after the New Year.
If gold surpasses $2629.13, it could move toward the 50-day moving average of $2668.75. Conversely, a drop below $2607.35 might send prices to $2583.91, with the next critical support level at $2536.85.
At 13:00 GMT, XAU/USD traded at $2615.47, reflecting a decline of $8.140 or -0.31%.
Fed’s Hawkish Stance Impacts Gold Prices
Gold remains under pressure following the Federal Reserve’s December 18 policy update. The Fed’s 25 basis point rate cut initially supported prices. However, the forecast for only two rate cuts in 2025, down from four in September, prompted selling. This shift dragged gold to its lowest levels since mid-November.
San Francisco Fed President Mary Daly cited robust consumer spending as a reason for maintaining elevated rates. For gold, rising interest rates diminish its appeal because it lacks yield and faces competition from interest-bearing assets.
Quiet Holiday Markets Keep Gold prices Steady
With sparse economic data and reduced trading activity during the holidays, gold is expected to trade in a tight range. Low liquidity curbs volatility, keeping price fluctuations minimal. Despite this, UBS maintains a bullish outlook, projecting gold to reach $2800 per ounce by mid-2025.
Looking ahead, geopolitical developments like the 2024 U.S. presidential election may inject fresh volatility into markets.
Treasury Yields and Dollar Remain Firm
Treasury yields showed slight increases at the start of the week. The 10-year yield rose to 4.536%, while the 2-year yield reached 4.325%. Although yields spiked after the Fed’s policy announcement, they eased on softer inflation data released last Friday. Meanwhile, the U.S. dollar remained steady as markets absorbed the Fed’s 2025 outlook.
Over the weekend, news of a narrowly avoided U.S. government shutdown reassured markets. However, trading volumes are expected to thin further as the Christmas holiday approaches.
Gold’s Outlook: A Waiting Game
Gold’s immediate trajectory depends on its ability to hold support at $2607.35. A drop below this threshold could accelerate losses to $2583.91 or even $2536.85. On the upside, a push above $2629.13 may lead to $2668.75. However, significant rallies are unlikely until after the holiday season.
In the long term, gold’s prospects remain favorable. Rate cuts, inflation worries, and geopolitical risks are expected to bolster demand through 2025. Traders should monitor economic data and political headlines that could renew interest in gold as a safe-haven asset.
For more insights into gold trading, visit Daily Gold Signal. Explore detailed updates on gold prices at Daily Gold Update.
