- Gold price experiences a slight pullback after a strong three-day rally.
- Fed Governor Waller surprised markets by suggesting that a March rate cut should not be ruled out.
- Gold attempts to consolidate above $2,700, aiming to maintain its weekly gains.
Gold price (XAU/USD) slightly pulls back but remains above the $2,700 mark on Friday, as traders engage in profit-taking following its three-day rally earlier this week. Federal Reserve Governor Christopher Waller surprised markets on Thursday by suggesting that a March interest rate cut should not be ruled out, creating uncertainty among traders who had not anticipated such a move.
Concerns are rising as traders question whether they missed a key signal or if a market reaction is imminent, especially with President-elect Donald Trump set to take office on Monday. His administration is expected to release several executive orders, including measures that could potentially drive inflation higher.
Daily Digest Market Movers: Tailwind Turns to Headwind
- Gold set multiple record highs last year, driven by the Federal Reserve's pivot toward interest rate cuts, significant purchases of the precious metal by major central banks, and increased haven demand amid global tensions. UBS Group AG forecasts that gold will continue to rise to new peaks this year, supported by trade and geopolitical uncertainties, as reported by Bloomberg.
- The Commodity Futures Trading Commission (CFTC) will release its weekly Commitment of Traders (COT) report at 20:30 GMT, detailing the size and direction of speculative positions in Chicago and New York futures markets. Last week's report revealed an increase to $254.9K from $247.3K the previous week.
- The US 10-year yield is trading around 4.596%, down more than 4.5% from its weekly high of 4.807% on Tuesday.
Technical Analysis: Gold Bulls Face Uncertainty
Gold traders are caught off guard after Federal Reserve Governor Christopher Waller suggested that a rate cut in March should not be ruled out, raising concerns about potential economic issues in the US. This shift in sentiment has created uncertainty after a period of easing rate-cut expectations that had supported bullish momentum in gold.
The key level to watch for the gold rally is $2,708, which will determine whether the momentum can be sustained into the weekend. If the price fails to hold above this level by Friday’s close, the next support lies at $2,671. Should further downside occur, the 55-day Simple Moving Average (SMA) at $2,648 and the 100-day SMA at $2,643 will be the next critical levels.
On the upside, $2,721 is the first resistance level to monitor, representing a potential double top from November and December. If gold manages to break through this, the all-time high of $2,790 will serve as the next key barrier.
