- Gold climbs as U.S. Treasury yields decline following higher unemployment claims and robust consumer spending.
- Retail sales rose 0.4% MoM in December, with November’s data revised up to 0.8%.
- Market expectations for 2025 Fed rate cuts increase, with two reductions projected by year-end.
Gold prices soared after US economic data revealed strong consumer spending and a rise in unemployment claims. This shift weighed on US Treasury yields, providing a boost to the precious metal, which surpassed $2,700 for the first time since December.
Gold Eyes Further Upside as Markets Anticipate Fed Rate Cuts
Gold and the US Dollar both gained ground following the release of December’s Retail Sales, which rose 0.4% MoM, missing expectations. However, an upward revision of November’s figures to 0.8% highlighted the strength of the economy. On the downside, Initial Jobless Claims for the week ending January 11 climbed to 217K from 201K, missing estimates of 210K.
Despite strong retail sales and resilient US Treasury yields, bullion buyers continued to dominate, pushing prices higher. The latest US inflation data has fueled expectations that the Federal Reserve (Fed) may ease monetary policy further in 2025. Market participants are now pricing in a near-even chance that the Fed will cut rates twice by year-end, with the first reduction potentially occurring in June.
Recent Fed commentary has highlighted concerns over the incoming Trump administration’s policies, such as tariff implementation, which could spur inflation.
This week’s economic calendar will feature housing data and US Industrial Production figures.
XAU/USD Technical Outlook:
Gold’s uptrend is likely to persist, but buyers will face key resistance at $2,726, the December 12 high. A break above this level could target $2,750 and the all-time high of $2,790.
On the downside, a drop below $2,700 could lead to a pullback toward the January 13 swing low at $2,656. Momentum remains strong, as indicated by the Relative Strength Index (RSI).
