- Gold price falls to almost $2,600 after the US dollar recovers and turns positive.
- The US dollar gains as Fed signals fewer interest rate cuts in 2025.
- Market experts predict that the Fed will resume its monetary easing cycle in March.
During Monday’s North American session, the price of gold (XAU/USD) fell near the weekly low of $2,600. The precious metal is facing selling pressure as the US Dollar (USD) reverses intraday losses to positive territory and the US Dollar Index (DXY) returns above 108.00. A higher US dollar makes the gold price an high-priced option for market participants.
The yield on 10-year US Treasuries fell to 4.55% on Monday. Lower yields on interest-bearing assets tend to weigh on unprofitable assets such as gold, increasing their opportunity costs. However, on Monday the report will be positive.
The outlook for gold prices appears uncertain as the Federal Reserve (Fed) is expected to cut interest rates less frequently in 2025. Fed policymakers decided to cut fewer interest rates next year because they are confident about United States (US) economic growth. Additionally, the slowing down of the disinflationary trend and better labor market conditions than Fed officials previously expected also necessitate a gradual cycle of monetary policy easing.
The Fed has cut its policy rates by 100 basis points (bps) this year to a range of 4.25-4.50% and is expected to leave them unchanged in January.
According to Goldman Sachs analysts, the Fed is expected to cut interest rates again in March. The company also expects two more in June and September.
Gold technical analysis
Gold prices are trading on a Symmetric Triangle chart on a daily time frame that is showing a acute decline in volatility. The 20-day exponential moving average (EMA) near $2,630 is aligned with the gold price, suggesting a sideways trend.
The Relative Strength Index (RSI) is fluctuating in the range of 40.00-60.00, indicating indecision among market participants.
Looking higher, the gold price would strengthen after a decisive break above the December high of $2,726.00. On the contrary, the bears would strengthen if the asset breaks below the November low around $2,537.00.
