- Gold is holding steady near $2,610 as the US dollar continues to strengthen.
- Fed signals fewer interest rate cuts next year, easing upward pressure on gold prices.
- XAU/USD faces downward pressure as it tests the 100-day SMA support.
The gold price remains relatively stable around $2,611 as market participants adjust to a more cautious view of U.S. interest rates. The broader context shows that the US dollar is maintaining its strength, supported by expectations that the Federal Reserve will adopt a slower pace of interest rate cuts in the coming year. Fed officials have indicated that fewer rate cuts are likely than previously expected, with the federal funds rate expected to reach 3.9% by the end of 2025. This change is due to a slower disinflation process and uncertainty over President-elect Donald’s policies Trump on Immigration, Trade and Tax Monetary Policy.
The modern Security Economic Supplement (SEP) has pushed up U.S. Treasury yields, which are typically seen as the opportunity cost of holding a position, another explanation for the metal’s recent decline.
As the market monitors the development of the situation, the unemployment claims data, which will be published next Thursday, may introduce some volatility in the US dollar exchange rate. Additionally, nonfarm payrolls data for December, expected in the first week of January, will be closely watched, with the labor market playing a key role in shaping Fed decisions. Despite these events, Gold remains under pressure and is unable to break out of its current range.
XAU/USD Technical Outlook
From a technical point of view, the XAU/USD pair faces earnest difficulties. The price remains in the negative area and the indicators show destitute dynamics. The pair is currently testing the 100-day Simple Moving Average (SMA) support at $2,610, which has been a critical level for gold in recent months. A sustained break below this level could signal further downside potential, while any recovery could face resistance near the $2,650-$2,670 range. Traders will be watching this support level closely for any signs of a reversal or continuation of the bearish trend.
