Technical Analysis

GOLD Price Analysis – Jan 29, 2025

By LHFX Technical Analysis
Jan 29, 20255 min
Gold

Daily Price Outlook

Gold price (XAU/USD) is unable to stop its losing streak and is still flashing red around the 2,762 level, hitting an intra-day low of 2,757.

However, the main reason for this downward trend seems to be the overall positive mood in the stock markets, which reduces the demand for safe-haven assets like gold.

Investors are more focused on the stronger performance of equities, which is keeping gold prices under pressure.

Moreover, traders are being cautious ahead of the Federal Reserve's upcoming policy decision. The Fed is expected to announce its plans later today, and this is creating uncertainty in the market, making people hesitate to make big moves in either direction.

Despite this, there are some factors still supporting gold including bets that the Federal Reserve might cut interest rates in 2025, along with falling US Treasury yields and some weakness in the US Dollar, are giving gold some backing.

Plus, ongoing concerns about US President Donald Trump’s tariff plans could be driving some investors to seek safe-haven assets, which helps limit gold's decline.

Traders are mainly waiting for the Fed’s decision, which will likely set the direction for the USD and gold prices in the near term.

US Dollar Holds Steady as Investors Await Fed's Interest Rate Decision and Monitor Trade Policy Uncertainty

On the US front, the broad-based US dollar has been holding steady around the 108.00 mark. Investors are waiting for the Federal Reserve's upcoming decision on interest rates, which is expected to take center stage later in the North American session. The Fed’s cautious approach to monetary policy continues to support the value of the US dollar.

According to the CME FedWatch tool, market expectations show almost 100% certainty that the Fed will keep its interest rate within the range of 4.25% to 4.50%. However, traders are still keenly watching the press conference from Fed Chair Jerome Powell for any clues on future policy moves.

At the same time, market uncertainty is rising due to potential changes in US trade policies. Treasury Secretary Scott Bessent, under former President Donald Trump, has proposed new tariffs on US imports, starting at 2.5% and possibly increasing to 20%.

Trump himself has stated he wants even higher tariffs, though no final decision has been made. If these tariffs are introduced, they could lead to higher inflation, making it harder for the Fed to cut interest rates. This would support the US Dollar further, potentially keeping gold under pressure.

However, if the Fed hints at more rate cuts in the future, it could weaken the dollar, giving gold some room to recover. Meanwhile, concerns over rising inflation from Trump’s tariff plans might push investors toward safe-haven assets like gold.

China's Economic Weakness and Stimulus Measures: Impact on Gold Prices

Apart from this, China's latest economic data has shown signs of weakness, which could impact global markets, including gold. The NBS Manufacturing PMI dropped to 49.1 in January from 50.1 in December, falling below expectations. Similarly, the Non-Manufacturing PMI declined to 50.2 from 52.2.

A weaker Chinese economy can reduce demand for commodities, including gold, as China is one of the world's largest gold consumers. This could put pressure on gold prices, especially if investors worry about slowing economic growth.

To support its struggling equity market, China has introduced new stimulus measures. The China Securities Regulatory Commission (CSRC) approved a second round of long-term stock investment programs worth 52 billion Yuan ($7.25 billion). This move aims to boost investor confidence and stabilize the market.

If China's economy improves due to these efforts, it could strengthen demand for gold. However, if the measures fail to revive economic growth, gold may remain under pressure due to lower demand from China.

In addition to this, China’s industrial profits declined by 3.3% in 2024, marking the third straight year of contraction.

This reflects ongoing challenges like weak demand, rising deflationary pressures, and a struggling property sector. If economic concerns persist, investors may seek safe-haven assets like gold, helping to limit its downside.

GOLD Price Chart - Source: Tradingview
GOLD Price Chart - Source: Tradingview

GOLD (XAU/USD) – Technical Analysis

Gold (XAU/USD) continues to edge lower, trading at $2,760.56, down 0.10%, as the metal struggles to maintain bullish momentum. The price remains under pressure below the pivot point at $2,766.14, signaling a cautious outlook. Technical indicators suggest gold is at a critical juncture, with the 50-day EMA at $2,756.96 acting as immediate dynamic support.

A sustained break below $2,765 would reinforce selling pressure, potentially leading to declines toward immediate support at $2,749.27. Further downside risks emerge at $2,730.85, followed by $2,717.11, where buyers may attempt to regain control.

On the upside, gold faces strong resistance at $2,782.18, a breakout above which could signal bullish momentum, with next resistance levels at $2,794.55 and $2,804.06. However, the prevailing trend remains bearish as long as gold struggles below the pivot.

The broader market sentiment hinges on Federal Reserve policy expectations and tariff uncertainties. With economic data providing mixed signals, traders remain cautious, awaiting a clearer directional bias. A sell position below $2,765, targeting $2,743, with a stop-loss at $2,778, aligns with current market structure.

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