Gold price analysis continues to face challenges in maintaining upward momentum, trading with slight positive movement near the $2,640 level during the early European session on Tuesday. While geopolitical tensions stemming from the prolonged Russia-Ukraine war and conflicts in the Middle East support safe-haven demand, concerns about US trade policies under President-elect Donald Trump add to investor caution. A slight decline in the US Dollar (USD) provides limited support to the yellow metal.
However, the Federal Reserve’s (Fed) hawkish policy stance limits significant appreciation in gold price analysis. The Fed has hinted at a slower pace of interest rate cuts in 2025, bolstering US Treasury bond yields and strengthening the USD. This dynamic caps the upside for non-yielding gold, as traders focus on this week’s key events, including the Federal Open Market Committee (FOMC) meeting minutes and the US Nonfarm Payrolls (NFP) report.
Gold Gains on Haven Demand, Lacks Bullish Momentum
Recent geopolitical events have provided some support for gold prices. The Ukrainian military’s offensive in the Kursk region and escalating violence in Gaza have heightened global uncertainty. Additionally, Israel’s military operations in Syria further contribute to risk aversion. These factors reinforce gold’s status as a safe-haven asset.
Meanwhile, the Federal Reserve’s cautious tone has weighed on gold’s upward trajectory. Policymakers, including San Francisco Fed President Mary Daly and Fed Governor Lisa Cook, have emphasized concerns over persistent inflation and the resilience of the labor market. These statements suggest a careful approach to future interest rate adjustments, which supports higher US Treasury yields and strengthens the USD, limiting gold’s appeal.
Key Data and Technical Outlook for Gold Price
Traders are closely monitoring economic indicators, including Tuesday’s ISM Services PMI and JOLTS Job Openings data, for additional market drivers. China’s central bank data revealed a slight dip in gold reserves at the end of December, which could influence sentiment.
From a technical standpoint, gold’s resilience above the 100-day Simple Moving Average (SMA) indicates potential near-term upside. However, resistance is expected around the $2,655-$2,657 zone, with further hurdles near $2,665 and $2,681-$2,683. A clear breakout above the $2,700 level may further propel the ongoing uptrend.
On the downside, support lies at the 100-day SMA near $2,626, followed by the $2,615-$2,614 region and the $2,600 level. A break below the December swing low of $2,583 could trigger a bearish shift and deeper declines.
Conclusion and Additional Resources
The gold market remains influenced by a mix of geopolitical risks and monetary policy expectations. While safe-haven demand offers intermittent support, the Federal Reserve’s hawkish stance keeps a lid on bullish sentiment. Traders should watch key economic releases for further clarity on gold’s direction.
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