• Gold fell slightly in slow trading, still up 0.40% during the week amid geopolitical tensions.
• Mixed US economic data; higher house starts, lower building permits have minimal impact on Bullion.
• Fed Governor Waller’s dovish comments suggest the potential for early interest rate cuts.

The price of gold fell at the end of the North American session, but is expected to end the week with gains of more than 0.40% as market players await the inauguration of US President-elect Donald Trump. Although the XAU/USD rate is at $2,701, down 0.44%, investors continued to buy the gold metal due to political uncertainty.

The precious metals market continues to be influenced by geopolitics and politics in the United States (US). Although U.S. Treasury yields remained unchanged on the belly of the curve, bullion buyers failed to push prices higher to secure additional gains ahead of the weekend.

The U.S. economic schedule showed housing starts increasing by double digits, although building permits fell in December. Gold barely reacted to the news as most of the data released during the week, led by Thursday’s retail sales, suggested the economy was solid.

The U.S. Dollar Index (DXY), which tracks the U.S. dollar’s performance against a basket of six other indices, rose 0.35% to 109.34.

Other data released during the Asian session showed that China’s economy will achieve a gross domestic product (GDP) growth rate of 5% in 2024, according to the National Bureau of Statistics.

On Thursday, Fed Governor Christopher Waller turned dovish and commented that the US central bank could reduce borrowing costs faster and faster if the disinflation process continues.

Market participants estimate almost equal chances that the Fed will cut interest rates twice by the end of 2025, with the first cut taking place in June.

Source: Main Square Terminal

Next week’s US economic report will include the inauguration of the US president, the release of preliminary unemployment numbers and preliminary PMIs.

Daily summary of market changes: Gold price under pressure ahead of the weekend

• Gold fell while real yields remained unchanged on Friday. As measured by the yield on the 10-year Treasury Inflation-Protected Securities (TIPS), it remained virtually unchanged at 2.18%.
• The US 10-year Treasury yield remained unchanged at 4.618%, which does not favor the gold metal.
• The number of housing starts in the US increased from 1.294 million to 1.499 million in December, an boost of 15.8% m/m.
• The number of building permits issued in the same period decreased from 1.493 million to 1.483 million, a decrease of 0.7%.
• The latest inflation data and Fed Waller’s comments put pressure on the US dollar as investors became more confident that the Fed would cut interest rates sooner rather than later. Waller did not rule out an interest rate cut at the March meeting as inflation “approaches our 2% inflation target.”

XAU/USD Technical Outlook: Gold Holding Near $2,700

Gold prices fell amid a lack of catalysts ahead of the weekend. Nevertheless, buyers need to keep the XAU/USD price above $2,700 to have any hope of pushing the yellow metal towards its December 12 high of $2,726. Once breached, the next level will be $2,750, followed by a record high of $2,790.

On the other hand, the failure of buyers to achieve the previously mentioned result could mean that gold could test the January 13 low at $2,656, followed by a confluence of the 50- and 100-day plain moving averages (SMAs) at $2,639-2,642 .