GOLD Price Analysis – Dec 31, 2024
Daily Price Outlook
Gold prices are closing out 2024 with a remarkable 26% gain, marking the metal's best annual performance since 2010.
This surge was fueled by robust central bank buying, heightened geopolitical risks, and a wave of monetary policy easing by major central banks. Gold last touched an all-time high of $2,790.15 on October 31, driven by a series of record-breaking rallies throughout the year.
“Rising geopolitical tensions, central bank demand, and renewed inflows into gold-linked Exchange Traded Commodities (ETCs) were key drivers of the rally,” noted Aneeka Gupta, Director of Macroeconomic Research at WisdomTree.
These dynamics made gold one of the top-performing assets of 2024, even as other markets faced headwinds from inflationary pressures and economic uncertainties.
Challenges Ahead: Dollar Strength and Slower Rate Cuts
Despite its stellar run, gold faces potential challenges in 2025. A stronger U.S. dollar and a more cautious Federal Reserve could moderate the metal’s upward momentum.
The Fed’s decision to implement a third consecutive rate cut in December was tempered by a warning of fewer cuts in 2025, reflecting concerns over persistent inflation.
Additionally, the incoming Trump administration’s economic policies—focused on tariffs, deregulation, and tax reforms—are expected to introduce further volatility into global markets. Such uncertainty, however, could bolster gold’s appeal as a safe-haven asset.
“Gold could continue to thrive in 2025 if geopolitical tensions escalate under Trump’s leadership, drawing investors toward this time-tested safe haven,” said Han Tan, Chief Market Analyst at Exinity Group.
2025 Outlook: Could Gold Hit $3,000?
Analysts remain optimistic about gold’s trajectory in the coming year. Goldman Sachs commodities strategist Daan Struyven projects prices could reach $3,000 per ounce, citing sustained central bank demand and renewed interest in gold ETFs as key factors.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is trading at $2,608.34, up 0.10%, as cautious optimism dominates amid low-volume, year-end trading. The pivot point at $2,620.16 remains critical, with prices struggling to sustain upward momentum.
Immediate resistance lies at $2,638.91, with further barriers at $2,651.73 and $2,665.31. On the downside, support is found at $2,593.70, followed by $2,577.23 and $2,561.89, key levels for maintaining bearish momentum.
The 4-hour chart reveals gold trading just below its 50 EMA at $2,620.02, signaling near-term weakness. The Relative Strength Index (RSI) stands at 43, reflecting mild bearish sentiment without indicating oversold conditions.
A break above $2,620.16 could shift momentum upward, targeting resistance at $2,638.91. Conversely, failure to hold above the pivot point may lead to declines, testing support at $2,593.70.
Gold’s price action is being shaped by broader market sentiment, with traders balancing geopolitical risks and expectations of the Federal Reserve’s 2025 rate policy.
A breakout above $2,638.91 would suggest renewed buying interest, while a decisive drop below $2,593.70 could accelerate selling pressure.
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AUD/USD Price Analysis – Dec 31, 2024
Daily Price Outlook
The Aussie Dollar (AUD) was quiet against the US Dollar (USD) after China released its December Manufacturing and Non-Manufacturing PMI numbers. China’s official Manufacturing PMI came in at 50.1, down from 50.3 and missed expectations. Non-Manufacturing PMI jumped to 52.2, up from 50.0 and above expectations of 50.2.
As Australia’s largest trading partner, we feel the ripples of China’s economic movements. The weak manufacturing data has us worried about exports, while the bounce in the service and construction sectors is a glimmer of hope.
RBA and Market Sentiment
RBA minutes showed the board is cautiously optimistic on inflation. They reiterated that they will keep rates on hold until inflation is more clearly stable. RBA Governor Michele Bullock said Australia’s labour market is more resilient than other countries so they can delay rate cuts compared to other central banks.
US Dollar Index (DXY) held around 108.00 as expectations of fewer Fed rate cuts in 2025. US Treasury yields fell on Monday with 2-year at 4.24% and 10-year at 4.53%. This left the AUD exposed to external winds and geopolitics.
Geopolitics and Economic Policy
Russia-Ukraine conflict and Middle East tensions added to the risk premium on the AUD. Traders are also worried about President-elect Trump’s policies and tariffs will increase costs. Add to that the Fed’s reluctance to cut rates and we have market uncertainty.
AUD/USD – Technical Analysis
The AUD/USD pair is trading at $0.62160, down 0.07%, reflecting continued bearish sentiment. The pivot point at $0.62433 acts as a critical juncture, with the pair struggling to regain upward momentum.
Immediate resistance lies at $0.62755, followed by $0.63058 and $0.63439, marking key levels for a potential bullish recovery. On the downside, support levels are seen at $0.62004, with deeper protection at $0.61576 and $0.61208.
The 4-hour chart shows the pair trading below its 50 EMA at $0.62257, signaling near-term weakness in the broader downtrend. The Relative Strength Index (RSI) is at 45, reflecting neutral-to-bearish conditions without signaling oversold levels.
A decisive break below the support at $0.62004 could intensify selling pressure, targeting the next critical level at $0.61576. Conversely, a move above $0.62433 would invalidate the bearish setup and may pave the way for a recovery toward $0.62755.
Market sentiment remains cautious as traders weigh concerns over global growth prospects and subdued commodity demand, which often weighs on the Australian dollar.
With thin year-end liquidity, the pair's movement will depend heavily on holding critical support levels while breaking resistance at $0.62433 for bullish momentum to emerge.
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USD/CAD Price Analysis – Dec 31, 2024
Daily Price Outlook
The Canadian dollar (CAD) strengthened slightly against the U.S. dollar (USD) on Monday as the greenback experienced modest losses during light holiday trading.
The USD/CAD pair is trading near 1.4362, reflecting the broader market’s reaction to declining U.S. Treasury yields and shifting investor expectations for Federal Reserve policies in 2025.
While the U.S. dollar has performed strongly throughout 2024, rising by 6.6% on the Dollar Index (DXY), recent geopolitical uncertainties and Canadian resilience have capped USD/CAD’s upward momentum.
The U.S. Federal Reserve’s surprise move to reduce its projected interest rate cuts for 2025—from 100 to 50 basis points—has bolstered the dollar against most global currencies.
However, Canada’s robust economic data, including strong job numbers and steady oil prices, provided support for the CAD, keeping USD/CAD fluctuations limited.
Federal Reserve Policies and Trump Administration Outlook
The Federal Reserve’s cautious stance on rate cuts reflects ongoing concerns over persistent inflation. U.S. Treasury yields dropped by roughly 2% this week, with the 2-year yield settling at 4.24% and the 10-year yield at 4.53%.
Meanwhile, President-elect Donald Trump’s policy agenda—centered on tariffs, tighter immigration rules, and increased fiscal spending—has added further uncertainty to global markets, driving USD gains.
Traders are also eyeing upcoming economic reports, including U.S. unemployment claims and Canadian manufacturing PMI data, which could influence USD/CAD’s trajectory. A favorable outcome for Canada could strengthen the CAD further, while disappointing data may bolster the greenback.
Geopolitical Risks and Canadian Dollar Stability
The Canadian dollar has weathered external pressures better than many emerging-market currencies, which remain vulnerable to the stark interest rate disparity between the U.S. and other economies. Meanwhile, geopolitical tensions, such as the ongoing Russia-Ukraine conflict, have weighed on global risk sentiment, supporting the safe-haven dollar.
USD/CAD – Technical Analysis
The USD/CAD pair is trading at $1.43622, up 0.05%, as it navigates a cautious upward trajectory. The pivot point at $1.44133 serves as a critical marker for directional momentum.
Immediate resistance is positioned at $1.44365, with higher targets at $1.44970 and $1.45508, representing potential barriers for sustained bullish momentum. On the downside, support levels lie at $1.43044, followed by $1.42583 and $1.42108, essential for preventing a deeper pullback.
The pair's price action remains underpinned by its proximity to the 50 EMA at $1.43874, which signals near-term consolidation.
The Relative Strength Index (RSI) at 43 reflects mildly bearish conditions, indicating that the pair is neither oversold nor poised for immediate upside strength.
A break above the pivot point at $1.44133 could validate bullish sentiment, targeting the next resistance at $1.44365. Conversely, slipping below the immediate support at $1.43044 may lead to a decline toward $1.42583.
Economic sentiment surrounding oil prices continues to influence the Canadian dollar, adding volatility to the pair.
Thin year-end liquidity and trader caution could magnify short-term movements. Watch for a decisive break above or below the pivot point to determine the pair's next directional move.
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- GOLD Price Analysis – Dec 31, 2024
GOLD Price Analysis – Dec 30, 2024
Daily Price Outlook
Gold (XAU/USD) has been trading within a narrow range, showing mixed signals around the 2,619 level, with an intraday high reaching 2,628.
This sluggish movement can be attributed to several factors, including expectations of fewer Fed rate cuts in 2025 and the ongoing geopolitical risks, such as the prolonged Russia-Ukraine conflict and rising tensions in the Middle East.
Despite this, gold continues to find upward support as markets await further clarity on the U.S. economy under the potential Trump administration and the Federal Reserve's stance on interest rates for the coming year.
Investors are closely watching for any signals that might provide direction in the coming months.
Gold's Performance Amid US Dollar Weakness and Geopolitical Tensions
On the US front, the broad-based US dollar has been slightly weaker, trading around 108.00 on the US Dollar Index (DXY), just below its highest level since November 2022.
Traders are still digesting the US Federal Reserve's (Fed) recent moves, including a quarter-point rate cut in December.
The latest Fed projections suggest two more rate cuts next year, but this cautious outlook for rate cuts could limit gold's potential upside.
As a non-yielding asset, gold often benefits when interest rates are lower or when Treasury yields decline.
Gold is also receiving support from geopolitical tensions, such as the ongoing Russia-Ukraine conflict and escalating issues in the Middle East. Recently, Israeli forces attacked hospitals in Gaza, resulting in casualties and heightened concerns.
These risks, along with potential trade conflicts under the incoming Trump administration, could increase the demand for safe-haven assets like gold, as investors seek protection against global uncertainties.
Looking at gold’s performance, the yellow metal is set to finish the year with a remarkable 27% gain, marking its strongest annual performance since 2010.
This surge has been driven by central bank buying, rising geopolitical risks, and loose monetary policies from major central banks.
Therefore, the combination of a subdued US dollar and falling Treasury yields is adding to gold’s strength.
While gold continues to find upward support, the outlook for the US economy and Fed's policy changes in 2025 remains key factors to watch for further price movements.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is trading at $2,619.77, down 0.09% in the last session, as bearish momentum dominates short-term price action.
The pivot point at $2,627.06 remains a key level to monitor. Prices staying below this threshold signal a continuation of the bearish bias, with immediate support at $2,607.94. Further declines could test secondary support levels at $2,593.70 and $2,577.23.
Resistance levels on the upside are clustered at $2,638.91, $2,651.73, and $2,665.31, presenting significant barriers to bullish recovery.
The Relative Strength Index (RSI) at 44 reflects moderately bearish momentum, with no immediate signs of oversold conditions. The 50 EMA, positioned at $2,622.68, reinforces the bearish trend, as gold continues to trade below this level.
A symmetrical triangle pattern on the 4-hour chart indicates potential for a breakout. However, the formation of a bearish engulfing candle suggests downward pressure remains dominant.
A short-term sell strategy below $2,627 with a target of $2,608 and a stop loss at $2,643 aligns with the current technical landscape.
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GBP/USD Price Analysis – Dec 30, 2024
Daily Price Outlook
During the Asian session on Monday, the GBP/USD continued its upward trend for the second day, trading around 1.2567 and reaching a high of 1.2590.
This rally was largely driven by a weaker US Dollar (USD), as market activity was quieter than usual ahead of the New Year holiday, with many traders sidelined.
However, the Pound’s upward momentum might face resistance due to some recent developments in the UK. The Bank of England (BoE) surprised markets with a split vote, where three of its policymakers voted in favor of rate cuts.
This unexpected shift indicates that the BoE might adopt a more aggressive approach to easing in 2025, which could weigh on the GBP in the longer term.
As a result, the GBP/USD pair has gained ground recently, the outlook remains uncertain, Traders will likely continue to monitor any updates from the BoE or the US economy closely for clearer direction.
GBP/USD Gains Amid Weaker US Dollar, but Fed's Cautious Stance Limits Further Upside
On the US front, the US Dollar has stayed under pressure due to lighter trading activity ahead of the New Year holiday.
This has helped the GBP/USD pair extend its gains. The reduced market participation has allowed the British Pound to climb higher, with the pair trading near 1.2567 after hitting an intra-day high of 1.2590. The weaker USD has provided temporary relief for the pair, fueling its upward momentum.
Fed Chair Jerome Powell also emphasized a careful approach to further rate reductions, stating that the Fed "will be cautious about further cuts." This message, paired with the Fed's cautious but firm stance, could lend support to the USD in the near term.
As a result, the GBP/USD has recently gained, the strong US Dollar could limit its growth, especially if the Fed’s outlook reinforces investor confidence in the USD.
Therefore, the weaker US Dollar has temporarily boosted the GBP/USD pair, allowing it to gain. However, the Fed's cautious stance on further rate cuts could support the USD in the near term, limiting the pair's upside potential and capping its growth.
GBP Faces Headwinds Amid BoE’s Cautious Stance on Rate Cuts and Economic Uncertainty
On the GBP front, the British Pound (GBP) faces challenges following a surprise split vote in the Bank of England (BoE). At its December meeting, the BoE held interest rates steady at 4.75%, signaling a cautious approach to future rate cuts.
However, three policymakers supported rate reductions, hinting at a potentially faster pace of easing in 2025.
This uncertainty has raised concerns about the Pound's strength, as markets remain unsure about how quickly or by how much the BoE might lower rates.
BoE Governor Andrew Bailey emphasized a measured approach, stating, "We believe a gradual path for future rate cuts is appropriate, but given the uncertainty in the economy, we cannot commit to specific timing or amounts."
These comments reflect the BoE's cautious outlook amid an uncertain economic environment, which could limit the Pound’s upward momentum.
As a result, the GBP/USD pair has recently gained, the Pound’s prospects may remain constrained by the BoE's hesitation and the broader economic outlook.
GBP/USD – Technical Analysis
GBP/USD is trading at $1.25782, up 0.02% on the session, showing cautious optimism as it approaches the pivot point at $1.25900.
The pair has maintained a modestly bullish tone, supported by its position above the 50 EMA, currently at $1.25441.
However, the pivot point remains a critical level; a failure to break higher could shift momentum to the downside.
Immediate resistance is at $1.26586, with further levels at $1.27292 and $1.27819, forming a significant ceiling for any bullish breakout.
On the downside, support is seen at $1.24776, with secondary levels at $1.24302 and $1.23771, marking key areas of interest for sellers.
The RSI at 57 indicates moderately bullish momentum, suggesting room for further gains without entering overbought territory.
The 4-hour chart reflects consolidation near the pivot, highlighting indecision as traders await a directional move.
A short-term sell strategy below $1.25890 with a target of $1.24989 and a stop loss at $1.26459 aligns with the technical setup.
Alternatively, a sustained break above $1.25900 could set the stage for a test of $1.26586. Traders should monitor market sentiment closely as this level acts as a pivotal barrier for the next trend.
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EUR/USD Price Analysis – Dec 30, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair struggled to hold onto its modest gains and edged lower around the 1.0415 level, hitting an intraday low of 1.0409.
This downward move can largely be attributed to a combination of factors, including the thin trading volume due to year-end liquidity, which is common during the holiday season.
Moreover, the Euro has also faced bearish pressure in the final months of 2024, with a near 5.5% decline against the US Dollar (USD) as the European Central Bank (ECB) stuck to its dovish stance on interest rates, disappointing investors who had hoped for a more aggressive approach to combat inflation.
Meanwhile, the concerns over the Eurozone’s economic health have been mounting, particularly with the threat of tariff hikes under US President-elect Donald Trump. These tariffs are expected to negatively impact the Eurozone’s export-driven economy.
US Dollar Strength and Its Impact on EUR/USD Amid Economic Data and Fed Expectations
On the US front, the broad-based US dollar has been gaining strength, consolidating near a four-day support level as trading volume remains thin during the year-end period.
The Greenback is on track to close the year near its highest level, with higher Treasury yields providing a strong boost.
US bond yields have been rising recently as investors expect the policies under President-elect Trump, like higher tariffs and tax cuts, to drive economic growth and inflation.
The Fed has already signaled fewer interest rate cuts for 2025 in its latest projections, with Federal Fund rates expected to be around 3.9% by the end of the year.
After a hawkish rate cut in December, Goldman Sachs predicts the Fed will cut rates again in March, with two more cuts expected in June and September.
This week, investors are focused on the US ISM Manufacturing Purchasing Managers’ Index (PMI) data for December, due on Friday. The PMI is expected to drop slightly to 48.3 from 48.4, indicating that manufacturing output is slowing down at a slightly faster pace.
Therefore, the strengthening US dollar, driven by higher Treasury yields and Fed policy expectations, puts downward pressure on the EUR/USD pair.
ECB’s Dovish Policy and US Tariff Concerns Weigh on the Euro
On the EUR front, the EUR/USD currency pair is set to close the year with a nearly 5.5% decline against the US Dollar, largely due to the European Central Bank’s (ECB) dovish stance on interest rates.
The Euro has been especially weak in the last three months of 2024, as market participants are concerned about the Eurozone’s economic growth.
This worry is compounded by the incoming tariff hikes from US President-elect Donald Trump, which are expected to negatively impact the Eurozone’s export sector.
The ECB has already lowered its Deposit Facility rate by 100 basis points to 3% this year, and it’s expected to cut it further to 2% by the middle of 2025.
This would indicate that the ECB plans to lower its key borrowing rates by 25 basis points at each meeting during the first half of next year.
Many ECB officials are concerned about inflation falling below their target of 2%, particularly with the political uncertainty in Germany and potential trade tensions with the US.
Therefore, the ECB's dovish stance and anticipated rate cuts, combined with concerns over Eurozone growth and US trade tensions, are likely to weaken the Euro further.
As a result, EUR/USD is expected to remain under pressure, potentially leading to continued declines.
EUR/USD – Technical Analysis
EUR/USD is trading at $1.04223, up 0.03% in the latest session, reflecting mild bullish sentiment as the pair hovers just below its pivot point at $1.04430. This level serves as a critical juncture for directional movement.
A sustained move below the pivot suggests bearish momentum, with immediate support at $1.03843 and further downside targets at $1.03430 and $1.03003.
Resistance levels are clustered at $1.04753, $1.05029, and $1.05453, forming a significant barrier for any upward movement.
The Relative Strength Index (RSI) at 54 indicates neutral to slightly bullish momentum, with no signs of overbought conditions. Meanwhile, the pair is trading slightly above the 50 EMA, which sits at $1.04117, signaling modest support for short-term gains.
The 4-hour chart reveals consolidation near the pivot point, suggesting indecision among traders. A sell strategy below $1.04427 with a target of $1.03836 and a stop loss at $1.04752 aligns with current technical trends.
However, a decisive breakout above $1.04430 could pave the way for testing the resistance at $1.04753. Market participants should remain vigilant as the pair navigates this critical zone, with key U.S. data releases likely to shape sentiment.
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S&P500 (SPX) Price Analysis – Dec 27, 2024
Daily Price Outlook
The S&P 500 index is trading at 6,037, down slightly on the day, and touching an intraday low of 6,007. The downward momentum reflects growing concerns among investors, driven by a mix of factors including economic uncertainty, Federal Reserve policies, and geopolitical risks.
Recent data indicates that U.S. consumer spending rose by 0.4% in November, reflecting strong demand for goods and services. The labor market also showed resilience, with employers adding 227,000 jobs in November, rebounding from slower growth in the prior month.
However, corporate profits have experienced fluctuations, with a decrease to $3,128.50 billion in the third quarter from $3,141.56 billion in the second quarter. These mixed signals contribute to investor uncertainty in equity markets.
Federal Reserve’s Monetary Policy Adds to Bearish Tone
The Federal Reserve's recent decision to cut interest rates by a quarter point, coupled with its projections for only two additional rate cuts in 2025, has introduced uncertainty into the markets.
This cautious stance has led to increased borrowing costs for businesses, potentially squeezing profits and dampening investor enthusiasm.
Consequently, investors are becoming more selective, favoring defensive sectors over growth stocks, which has contributed to the downward pressure on the S&P 500 index.
Following the Fed's announcement, the S&P 500 experienced a significant decline, marking its worst performance on a Fed decision day since 2001. The index fell nearly 3%, reflecting investor concerns about the slower pace of rate cuts and the potential impact on corporate earnings.
Geopolitical Tensions Weigh on S&P 500 Performance
On the geopolitical front, the tensions continue to significantly influence the performance of the S&P 500 index. Escalating conflicts in Eastern Europe and the Middle East have heightened risk aversion among investors. These uncertainties have raised concerns about potential disruptions to global trade, leading to a shift in capital toward safe-haven assets such as the US Dollar.
This shift has resulted in reduced appetite for equities, including the S&P 500, contributing to its downward trend.
Furthermore, the fears of energy supply disruptions, particularly in regions affected by geopolitical instability, have further weighed on market sentiment. As concerns grow over the potential for higher energy prices and broader economic implications, investors remain cautious.
The heightened geopolitical risks, coupled with ongoing economic uncertainties, have caused volatility in the S&P 500, making it more susceptible to declines as investors seek safer investment options.
Looking ahead, geopolitical risks are expected to remain a significant factor in shaping market sentiment and investor behavior, continuing to exert pressure on equity markets, including the S&P 500 index.
S&P 500 – Technical Analysis
The S&P 500 index is trading at 6037.58, down slightly by 0.04%, reflecting a cautious tone near the pivot point at 6047.03. On the 4-hour chart, the index shows signs of consolidation above the 50-day EMA at 6020.59, with the RSI at 58 indicating moderate bullish momentum, though strength appears to be fading.
Immediate resistance is seen at 6092.04, followed by 6140.58 and 6192.73. A sustained move above these levels would signal renewed bullish momentum and potential for further gains. On the downside, support lies at 5982.79, with deeper levels at 5906.16 and 5841.25.
A break below 6045 could trigger additional selling pressure, pushing the index toward 5980 and possibly lower. Alternatively, holding above the pivot at 6047.03 could reignite upward momentum, with bulls targeting resistance at 6092.04. Traders should watch these levels closely, as a breakout will provide clarity on the next trend.
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EUR/USD Price Analysis – Dec 27, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair gained some slight bullish traction, holding around the 1.0432 level.
However, the outlook for the Euro (EUR) remains weak, with market expectations that the European Central Bank (ECB) will continue its gradual interest rate cuts well into the first half of 2025.
As a result, the pair has been struggling to find clear direction, moving within a narrow range near 1.0400. Thin trading volumes, due to the Christmas holiday, have also contributed to the lack of significant movement in the pair.
On the other hand, the US Dollar (USD) has seen a small uptick, fueled by expectations that the Federal Reserve (Fed) will continue its gradual approach to policy easing, especially after inflation showed some signs of rebounding over the past few months.
With both central banks likely to follow divergent paths, EUR/USD remains stuck in this indecisive pattern as traders await clearer signals for the next move.
Euro Outlook Weighed Down by ECB Rate Cuts, Limiting EUR/USD Upside Potential
On the EUR front, the shared currency is struggling as the overall outlook for the Euro (EUR) remains negative. The European Central Bank (ECB) is expected to continue cutting interest rates at the current pace until mid-2025.
The ECB has already lowered its Deposit Facility rate by 100 basis points (bps) this year and is anticipated to reduce it by another 100 bps in the coming year. This is due to inflation in the Eurozone being more under control, although it is still above the ECB's target of 2%.
ECB President Christine Lagarde expressed confidence that inflation is moving in the right direction, saying that they are "very close" to achieving their 2% medium-term target.
However, she emphasized the need to remain cautious about inflation in the services sector. Recent comments from ECB officials suggest that they are aligned with market expectations of further rate cuts, aiming to bring the benchmark deposit rate down to 2%, which they consider a neutral level.
This cautious approach is meant to prevent inflation from falling too far below the target, which could pose risks to the economy.
Therefore, the ECB's continued interest rate cuts and cautious stance on inflation are likely to keep the Euro (EUR) under pressure, leading to limited upside potential for the EUR/USD pair. As a result, the pair may struggle to break higher levels.
US Dollar Strengthens Amid Gradual Fed Easing Expectations and Positive Job Data
On the US front, the broad-based US Dollar has been showing strength, trading higher as the market anticipates a gradual policy easing by the Federal Reserve (Fed).
Despite the slight rebound in inflation over the past three months, expectations for a slowdown in the Fed's interest rate cuts have kept the USD steady.
Recently, the Fed’s updated dot plot suggested two rate cuts in 2025, a revision from the four cuts previously expected. This has helped keep the USD in positive territory, as markets expect the economy to show solid growth under President-elect Donald Trump’s administration.
On the economic front, the latest data has been slightly better than expected. For the week ending December 20, initial jobless claims dropped unexpectedly to 219K, lower than the 220K recorded previously and better than the expected 224K.
Despite the positive job market data, analysts at BCA Research predict that the Fed will eventually cut rates by more than 50 basis points (bps) next year due to expectations that inflation will remain below the Fed’s 2% target and the unemployment rate will rise higher than forecasted. These factors suggest a more cautious outlook for the economy moving forward.
EUR/USD – Technical Analysis
The EUR/USD pair is trading at $1.04100, down 0.10% in the last session, as the pair remains under pressure near its pivot point at $1.04430.
Immediate resistance is located at $1.05029, with further resistance levels at $1.05453 and $1.05972. To confirm a bullish recovery, the pair must break and sustain above these levels.
However, the current bias suggests more downside risks. Immediate support lies at $1.03430, with subsequent levels at $1.03033 and $1.02722.
A break below $1.04424 could signal additional selling pressure, targeting $1.03626 in the short term. If bearish momentum persists, the pair may test deeper support levels at $1.03033 or even $1.02722.
Conversely, a recovery above $1.05029 would neutralize the bearish bias, paving the way for a potential upside toward $1.05453.
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- GOLD Price Analysis – Dec 27, 2024
GOLD Price Analysis – Dec 27, 2024
Daily Price Outlook
Gold prices (XAU/USD) extended their bearish trend, trading under pressure around the 2,629 level and reaching an intraday low of 2,628.
The decline can be attributed to a strengthening US Dollar (USD), bolstered by rising expectations of fewer interest rate cuts by the US Federal Reserve (Fed).
In its December meeting, the Fed reduced rates by a quarter point and revised its 2025 outlook, projecting only two rate cuts instead of the previously anticipated four. Despite the bearish momentum, ongoing geopolitical tensions continue to provide some support for the precious metal's value.
Impact of Stronger US Dollar and Fed's Hawkish Outlook on Gold Prices
On the US front, the broad-based US Dollar (USD) is gaining strength due to growing expectations that the Federal Reserve (Fed) will cut interest rates less aggressively.
During its December meeting, the Fed reduced rates by a modest quarter point and revised its 2025 forecast, now projecting just two rate cuts instead of the previously expected four. This hawkish outlook has provided strong support to the USD, making it more attractive to investors and putting pressure on gold prices.
The US Dollar Index (DXY), which tracks the value of the USD against six major currencies, is currently trading above 108.00, just below its highest level since November 2022.
However, the potential for further upside in the USD could be limited, as 2-year and 10-year yields on US Treasury bonds remain relatively low at 4.32% and 4.57%, respectively.
This could cap the Greenback’s strength and offer some support to gold, which remains sensitive to moves in the USD and interest rates.
Therefore, the strengthening US Dollar, driven by a more hawkish Fed outlook, pressures gold prices as investors favor the USD.
However, subdued US Treasury yields may limit further USD gains, providing some support for gold, which remains sensitive to currency moves.
GOLD (XAU/USD) – Technical Analysis
Gold is trading at $2,635.20, up 0.04% on the day, reflecting continued consolidation around its pivot point of $2,632.02.
The 4-hour chart highlights a cautiously bullish tone as the price remains supported above the 50-day EMA at $2,620, with the Relative Strength Index (RSI) at 60, indicating moderate bullish momentum.
Immediate resistance is positioned at $2,650.06, followed by key levels at $2,664.89 and $2,678.42. A break above $2,650.06 could signal further upside, with the potential to test the upper resistance zones.
Conversely, immediate support lies at $2,607.94, with deeper safety nets at $2,593.70 and $2,577.23 if bearish momentum re-emerges.
Gold’s recent price action indicates a stable upward trend, supported by the 50-day EMA. The technical setup suggests buying opportunities above $2,632, targeting $2,650, while a break below $2,620 could trigger bearish sentiment.
Traders should monitor resistance levels closely, as a decisive move above $2,650 may strengthen the bullish outlook.
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AUD/USD Price Analysis – Dec 26, 2024
Daily Price Outlook
During the European trading session, the AUD/USD pair struggled for the second day in a row on Thursday, weighed down by a stronger US Dollar and the Reserve Bank of Australia's (RBA) December meeting minutes.
The US Dollar bounced back after a steep decline, as Federal Reserve officials hinted at fewer rate cuts next year, pointing to a slowdown in easing inflation. This recovery pushed the dollar close to a two-year high, putting pressure on the Aussie and other Asian currencies.
US Economic Data and Fed's Stance Strengthen US Dollar, Weighing on AUD/USD Pair
On the US front, the broad-based US Dollar rebounded after a sharp sell-off, as Federal Reserve officials signaled fewer interest rate cuts next year due to a slowdown in the disinflation process. However, soft US PCE data have kept inflation concerns in check, leading to a mixed economic outlook.
According to the CME FedWatch tool, markets now expect a nearly 93% chance that the Federal Reserve will keep interest rates unchanged in January, maintaining the current range of 4.25%-4.50%.
US Durable Goods Orders for November came in weaker than expected, falling by 1.1% compared to the forecasted 0.4% drop. This follows an upward revision in October, which saw a 0.8% increase, up from an initial 0.2% gain.
Meanwhile, US Consumer Confidence dropped 8.1 points in December to 104.7, signaling that the earlier rebound in consumer confidence was not sustained.
Concerns over President-elect Trump’s economic policies, particularly around tariffs, have added to household worries about rising living costs.
These concerns were further reflected in the Federal Open Market Committee's projections, which suggested fewer rate cuts in 2025 due to persistent inflation pressures.
Cleveland Fed President Beth Hammack noted that she prefers to keep interest rates steady until there is more evidence of inflation heading back to the Fed’s 2% target.
Meanwhile, Chicago Fed President Austan Goolsbee revised his forecast for 2025, expecting fewer rate cuts than previously anticipated.
US core PCE inflation rose 2.8% year-over-year, slower than expected, while monthly inflation grew by just 0.1%, showing moderate price increases. This mixed data adds to the pressure on the AUD/USD pair.
Therefore, the mixed US economic data, along with expectations for fewer rate cuts, strengthens the US Dollar, putting downward pressure on the AUD/USD pair.
The market's uncertainty about inflation and interest rates further intensifies bearish sentiment for the Aussie Dollar.
AUD/USD – Technical Analysis
The AUD/USD is trading at $0.62369, up 0.07% in the last session, reflecting cautious market sentiment. The pair remains below the pivot point of $0.62511, signaling potential bearish pressure unless it breaks above this level.
Immediate resistance lies at $0.63068, followed by $0.63420 and $0.63812, which could act as key upside targets if the bullish momentum strengthens. On the downside, support is located at $0.62004, with additional levels at $0.61565 and $0.61090, which could be tested if selling pressure intensifies.
Technical indicators paint a mixed picture. The RSI is at 48, reflecting a neutral sentiment with a slight bearish inclination.
The 50-day Exponential Moving Average (EMA) at $0.62391 is near the current price, providing a dynamic resistance level that aligns with the broader downward bias. A failure to reclaim $0.62511 could result in a deeper pullback toward $0.62004 or lower.
The pair’s price action is likely to hinge on the $0.62511 pivot point. A sustained move above this level would indicate recovery potential, targeting $0.63068, while a rejection may confirm further downside. Traders may consider a sell limit order at $0.62518, targeting $0.62008, with a stop loss at $0.62853 to manage risk effectively.
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