The gold price is holding around $2,610 as the US dollar continues to gain strength. The market is in a state of flux as the Federal Reserve’s signals of fewer rate cuts in the upcoming year has put downward pressure on gold. The XAU/USD pair is currently testing the 100 – day SMA support at $2,610.
The Federal Reserve’s indication of a slower pace of rate cuts has been a key factor in the market. This comes as the disinflation process is slow, and there are uncertainties surrounding President – elect Donald Trump’s policies on immigration, trade, and taxes. The Summary of Economic Protections (SEP) has led to an increase in US Treasury yields, which is seen as the opportunity cost of holding gold, contributing to the metal’s decline.
Looking ahead, the release of Initial Jobless Claims data this Thursday could potentially cause volatility for the US dollar. Also, the Non – farm Payrolls figure for December, expected in early January, will be closely watched. The labor market is crucial in shaping the Fed’s decisions. Despite these events, gold remains under pressure and is struggling to break out of its current range.
Technical Analysis of XAU/USD
In terms of technical analysis, the XAU/USD pair is facing significant challenges. The price is in negative territory, with weak momentum indicators. The 100 – day Simple Moving Average (SMA) at $2,610 is a critical level for gold. If the price breaks below this level, it could signal further downward movement. However, if there is a bounce, resistance could be seen near the $2,650 – $2,670 range. Traders will be closely monitoring this support level for any signs of a trend reversal or continuation of the bearish trend.
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