- Gold holds steady near $2,610 despite the strengthening US Dollar.
- The Fed’s outlook for fewer rate cuts next year limits Gold’s upward momentum.
- XAU/USD remains under pressure, testing support at the 100-day SMA.
Gold prices remain stable around $2,611 as markets digest the Federal Reserve’s more cautious stance on interest rate cuts. The US Dollar continues to strengthen, underpinned by expectations of a slower pace of rate reductions in 2025, with the federal funds rate projected to reach 3.9% by year-end. This shift reflects stalled progress in disinflation and uncertainty surrounding President-elect Donald Trump’s policies on immigration, trade, and taxes.
The Fed’s latest Summary of Economic Projections (SEP) has driven US Treasury yields higher, increasing the opportunity cost of holding non-yielding assets like Gold, contributing to the metal’s recent weakness.
Meanwhile, market attention turns to key data releases, including Initial Jobless Claims on Thursday and December’s Nonfarm Payrolls, due in early January, which could influence the US Dollar and Fed policy outlook.
XAU/USD Technical Outlook
Gold faces significant technical challenges as it tests support at the 100-day Simple Moving Average (SMA) near $2,610, a critical level in recent months. Momentum indicators point to continued weakness, and a decisive break below this support could signal further downside. Conversely, a rebound could encounter resistance in the $2,650-$2,670 range. Traders are closely monitoring this level for signs of either a reversal or a continuation of the bearish trend.
