Gold’s impressive rally in 2024, which saw a near 27% increase—the best performance since 2010—is encountering pressure as investors adjust to the Federal Reserve’s projected path of more modest interest rate cuts next year. The precious metal, historically sensitive to shifts in monetary policy, faces a delicate balancing act as the Fed signals just 35 basis points of cuts in 2025, tempering expectations for future price gains.
Despite Friday’s benign U.S. inflation data easing some concerns, gold remains susceptible to volatility driven by political uncertainty. Trade policies under President-elect Donald Trump have sparked renewed interest in gold as a safe-haven asset. Kelvin Wong, senior market analyst at OANDA, highlighted the risk of retaliatory trade sanctions, which could amplify market volatility and push demand for gold higher.
Technical Outlook: Gold (XAU/USD)
Gold’s spot price is attempting a recovery from recent declines, trading at $2,618.89. Key resistance levels are pegged at $2,627.75, followed by $2,639.67 and $2,663.60. On the downside, immediate support is found at $2,602.41, with further levels at $2,580.87 and $2,560.71.
The 50-day exponential moving average (EMA) aligns with the pivot point at $2,621.75, suggesting a potential reversal area. The relative strength index (RSI) stands at 51.85, indicating consolidation, with no clear momentum direction. A sustained breakout above $2,627.75 could shift the market’s bias toward a bullish outlook, targeting $2,639.67. Conversely, a drop below $2,602 could signal further downside pressure.
Gold’s Record Year and Market Risks
Gold’s stellar performance in 2024 has been fueled by central bank purchases, geopolitical tensions, and loose monetary policies across major economies. However, as the U.S. prepares for policy shifts under the incoming Trump administration, market sentiment remains cautious. Trade tariffs, deregulation, and potential tax reforms could introduce further uncertainties into the market, weighing on investor confidence heading into 2025.
Traders are advised to closely monitor economic indicators, including durable goods data, and to be mindful of potential holiday trading liquidity, which could amplify price volatility in the coming months.
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