Gold price at highest level since mid-December as inflation fears return

Gold price continues to move above $2,675 and registers over 0.50% gain this Thursday.
Traders are once again favoring the former metal as an ideal safe-haven for inflation as global yields rise.
Gold price is heading towards $2,680 and is set to test possible essential technical resistance.

The price of gold (XAU/USD) is rising again and entering its third consecutive day of gains, after breaking and closing above the 55-day straightforward moving average (SMA) at $2,654 the previous day. The move comes as yields around the world begin to rise on inflation concerns. Traders are starting to worry that inflation could peak again after all the stimulus plans, fiscal reforms and tariffs that President-elect Donald Trump has announced over the past few days and weeks.

When it comes to economic data, all eyes will be on the Federal Reserve (Fed) this Thursday, with plenty of policymakers lining up to speak. Overnight, the Fed minutes from its December meeting provided no fresh facts about interest rate expectations for 2025. Meanwhile, markets will be paying attention to Bitcoin, which has sold off significantly this week as yields soar. This creates the same set of parameters as in 2023, which ended with the bankruptcy of Silicon Valley Bank.

Daily market recap: Fed remains largely on the sidelines

US stock markets will be closed on Thursday for the National Day of Mourning in honor of former President Jimmy Carter. The bond market will operate on a shortened schedule and end early.
The $22 billion 30-year reopening Treasury bond was awarded at 4.913% compared to 4.920% when issued on the 1 p.m. New York time bid deadline, the highest since 2007, according to Bloomberg.
US yields are softening somewhat, with the 10-year benchmark at 4.673%, down from a nine-month high of 4.728% recorded on Wednesday.
The reshuffle and pullback in June-to-July rate cut expectations in CME’s FedWatch tool coincides with the release of the Fed minutes on Wednesday, in which Fed officials reaffirmed a gradual and possibly longer-term fixed interest rate before considering further cuts, according to Bloomberg.
At 2:00 p.m. GMT, Federal Reserve Bank of Philadelphia President Patrick Harker delivers a speech and participates in an audience Q&A at the Economic Forecast 2025 event hosted by the New Jersey chapter of the National Association of Corporate Executives.
At approximately 17:40 GMT Federal Reserve Bank of Richmond Thomas Barkin addresses the Virginia Bankers Association and the Virginia Chamber of Commerce.
At 18:30 GMT, Federal Reserve Bank of Kansas City President Jeff Schmid delivers a speech on the outlook for US economic and monetary policy during an event organized by the Economic Club of Kansas City.
At 18:35 GMT, Federal Reserve Governor Michelle Bowman delivers a speech reflecting on “2024: Monetary policy, economic performance, and lessons from banking regulation.”

Technical Analysis: If it breaks, it could happen quickly

The surge in gold prices is heading towards resistance in a broader pennant chart pattern. Things can start to get tricky from here, and the level to watch out for is $2,680. Once above this level, gold prices could quickly rise to $2,700 and above.

On the other hand, the 55-day SMA at $2,654 should now turn into support after closing above the intraday low on Wednesday. Additionally, the 100-day straightforward moving average (SMA) at $2,632 holds again after a false break on Monday. Further down, the uptrend line of the pennant pattern should provide support at around $2,612, as it did in the last three instances. If this support line is broken, a quick decline to $2,531 (August 20, 2024 high) could return as support level.

On the other hand, the downward trend line on the pennant chart at $2,680 is the first major upside level worth watching. Once you have achieved this, the next key level to pay attention to is $2,708.

XAU/USD: Daily chart