Gold price (XAU/USD) experienced modest intraday gains during the early European session on Wednesday. However, the momentum lacked strong bullish conviction, with prices hovering below the $2,665 resistance level retested the previous day. Several global factors, including uncertainty around US tariff policies, geopolitical tensions, and a softer risk tone, supported safe-haven demand for gold.
Despite these supportive elements, the Federal Reserve’s (Fed) hawkish stance and strong US Treasury bond yields near multi-month highs limited gold’s upside. In addition, renewed US Dollar (USD) strength kept the non-yielding metal under pressure. Market participants remain cautious ahead of critical US economic data releases and the Federal Open Market Committee (FOMC) meeting minutes, expected later in the day.
Gold Price Bulls Await FOMC Meeting Minutes
On Tuesday, US Treasury yields and the USD saw a notable rise, driven by strong US economic data. The Institute for Supply Management’s Non-Manufacturing Purchasing Managers’ Index (PMI) increased to 54.1 in December, while the Prices Paid component climbed to a two-year high. Additionally, the JOLTS report revealed that job openings unexpectedly rose to 8.098 million in November, signaling resilience in the US economy.
This data bolstered market expectations that the Fed may slow its rate-cutting pace in 2025. As a result, the benchmark 10-year US government bond yield reached its highest level since April. Atlanta Fed President Raphael Bostic’s comments underscoring caution in lowering rates further supported elevated yields.
Meanwhile, geopolitical concerns added to the uncertainty. US President-elect Donald Trump dismissed reports of a less aggressive tariff policy and hinted at military action concerning Israeli captives in Gaza. These developments increased tensions in the Middle East, further supporting gold’s safe-haven appeal.
Technical Outlook: Gold Below $2,665 Resistance
Key Resistance Levels
The $2,665 level acts as a critical resistance point for gold. A sustained move above this level could signal renewed bullish momentum, targeting the next resistance zones near $2,681-2,683 and eventually $2,700.
Key Support Levels
On the downside, gold may find initial support around $2,635, with additional cushions near $2,615-2,614. A decisive break below $2,600, which aligns with the 100-day Exponential Moving Average (EMA) and a short-term ascending trend line, could expose the December low of $2,583. Breaching this level may shift the near-term bias towards bearish traders.
Focus on Upcoming US Economic Data
Gold traders are eyeing the ADP private-sector employment report and Weekly Initial Jobless Claims scheduled for release today. These indicators will offer insights into the US labor market and short-term trading opportunities. However, the primary focus remains on the FOMC meeting minutes, which will influence USD price dynamics and provide fresh cues for gold price movement.
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Conclusion:
Gold prices remain constrained below critical resistance levels, with the market’s attention centered on FOMC meeting minutes and upcoming US economic data. While geopolitical and economic uncertainties support the yellow metal, strong US Treasury yields and USD strength limit its upside.
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