The gold price (XAU/USD) remains under pressure despite a modest uptick during the Asian session on Friday. Trading below the key $2,600 mark, the yellow metal struggles to find strong bullish momentum due to mixed fundamental signals. The Federal Reserve’s hawkish stance on rate cuts for 2025 has bolstered the US Dollar (USD), which recently climbed to a two-year peak, acting as a headwind for non-yielding assets like gold.
Key Factors Influencing Gold Price Movement
Federal Reserve’s Hawkish Outlook:
The Fed’s signal to slow the pace of rate cuts in 2025 has strengthened the USD, capping gold’s upside potential.
Geopolitical and Economic Risks:
Persistent geopolitical tensions, trade war fears, and the looming threat of a US government shutdown continue to impact market sentiment, providing some safe-haven support for gold.
Weaker Equity Markets:
A generally softer tone in global equity markets underpins demand for gold as a hedge against risk.
Upcoming Economic Data:
Investors remain cautious ahead of the US Personal Consumption Expenditure (PCE) Price Index, the Fed’s preferred measure of inflation.
Technical Analysis: Gold Price Lacks Bullish Conviction
Bearish Technical Indicators:
The recent breakdown below the 100-day Simple Moving Average (SMA) has triggered fresh bearish sentiment.
Daily chart oscillators indicate growing negative momentum, suggesting further downside risks.
Resistance Levels:
Immediate resistance lies near the $2,626 mark, with stronger barriers at the $2,652-$2,655 zone.
A sustained break above these levels could negate the bearish bias and pave the way for further gains.
Support Levels:
Immediate support is seen around the monthly low at $2,583. A break below this level could expose the $2,560 region and further downside to the $2,537-$2,536 zone.
In the event of continued bearish momentum, the $2,500 psychological level and the crucial 200-day SMA near $2,472 could come into play.
Fundamental Outlook: What’s Next for Gold?
While gold retains its safe-haven appeal amid softer risk sentiment, the mixed signals from fundamental factors are limiting bullish bets. The Federal Reserve’s hawkish stance and stronger USD remain key headwinds, but geopolitical risks and weaker equities offer some counterbalance. Traders are likely to remain cautious ahead of the PCE Price Index release, which could provide further clarity on the inflation outlook.
Conclusion
Gold prices continue to navigate a challenging landscape of mixed signals. Although the yellow metal finds some support from risk-off sentiment, its inability to break above key resistance levels suggests a lack of bullish conviction. Investors should watch for the PCE Price Index release and other macroeconomic indicators to gauge the next directional move for XAU/USD.
