Gold price (XAU/USD) have been on a steady rise as they prepare for the release of the US ISM Manufacturing Purchasing Managers’ Index (PMI) data for December. Scheduled for 15:00 GMT, the PMI is expected to maintain a level of 48.4, indicating consistent contraction in manufacturing activities.
A Stellar Year for Gold Price
In 2024, gold price has shown remarkable performance, with gains surpassing 27%, marking the highest annual return since 2010. This sustained upward trend is attributed to increased safe-haven demand, driven by geopolitical tensions in the Middle East and ongoing conflicts such as the Russia-Ukraine war.
Geopolitical Tensions Impact on Gold Price
Recent discussions around US President Joe Biden’s contingency plans to strike Iran’s nuclear facilities highlight growing concerns over Iran’s nuclear ambitions. According to Axios, these discussions have elevated worries during the transitional period between administrations.
Economic Shifts in China
Financial experts are keenly observing potential changes in China’s economy. The People’s Bank of China (PBoC) has indicated a possible interest rate cut, aiming to support economic recovery. In addition, President Xi Jinping has pledged to implement proactive measures to support economic growth throughout 2025.
US Dollar’s Influence on Gold Price
As the US Dollar Index (DXY) hit a multi-year high of 109.56, gold’s gains were slightly limited. A stronger USD typically makes gold more expensive for foreign buyers. However, the lower bond yields and subdued US Treasury yields are supporting gold’s appeal.
Hawkish Stance and Central Bank Purchases
The Federal Reserve’s cautious stance on rate cuts has contributed to a more stringent monetary policy. Meanwhile, central banks worldwide continue to increase gold purchases, further boosting demand for the precious metal.
Gold in a Dynamic Market
China’s manufacturing sector shows minimal growth, but other areas like services and construction are recovering, aided by policy stimulus. On the geopolitical front, Russia and Israel have engaged in intensified military actions, influencing gold’s performance.
Technical Analysis
The current price of gold is approximately $2,660.00 per troy ounce. The daily chart indicates a bullish outlook, with the price climbing above both the nine- and 14-day Exponential Moving Averages (EMAs). The Relative Strength Index (RSI) has also risen above the 50 mark, reinforcing the bullish momentum.
On the upside, the XAU/USD pair is expected to challenge resistance near $2,700.00, followed by $2,726.34, its recent monthly high. On the downside, support is seen around $2,635.00 and $2,583.39 for initial levels.
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