Daily Price Outlook
Gold (XAU/USD) failed to extend its upward trend and edged lower around the $2,791 level on Friday, retreating from its recent record high. The decline comes as investors remain cautious due to the Federal Reserve’s firm stance on interest rates, a stronger US dollar, and ongoing geopolitical tensions.
Gold Faces Pressure from Federal Reserve’s Hawkish Stance
However, the major factor weighing on gold prices is the Federal Reserve’s decision to pause interest rate cuts for the first time since its easing cycle began in September.
The central bank’s cautious approach has led to a slight rise in US Treasury bond yields, strengthening the US dollar and limiting gold’s upside potential.
As a result, traders are hesitant to make aggressive bullish bets until they receive more clarity from upcoming economic data.
Moreover, the Fed has signaled that it will not rush to lower borrowing costs unless inflation and employment data justify such action. This has kept the US dollar strong, reducing the appeal of gold as a non-yielding asset.
US Tariff Threats and Geopolitical Risks Boost Safe-Haven Demand
Despite the pullback in gold prices, demand for the precious metal remains supported by ongoing global uncertainties. US President Donald Trump’s renewed threats to impose 25% tariffs on Mexico and Canada, along with potential 100% tariffs on BRICS nations if they challenge the US dollar’s dominance, have raised investor concerns.
Moreover, heightened geopolitical tensions have added to market instability. Japan’s Joint Staff Office reported that Russian bombers, accompanied by fighter jets, flew an eight-hour mission over the Sea of Okhotsk and the Sea of Japan, escalating regional concerns.
Economic Data in Focus: US PCE Price Index Awaited
On the economic front, weaker-than-expected US GDP growth of 2.3% in the fourth quarter of 2024—down from the previous 3.1%—has raised recession fears. This could fuel fresh interest in gold as a hedge against economic downturns.
However, market participants remain cautious ahead of the US Personal Consumption Expenditure (PCE) Price Index release, scheduled for later on Friday.
As the Federal Reserve’s preferred measure of inflation, the PCE data will play a crucial role in shaping market sentiment and influencing gold’s next move.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) continues its upward trajectory, holding near $2,795.88, with bullish momentum intact. The metal is trading above the pivot level of $2,788.36, signaling further upside potential.
Immediate resistance is seen at $2,814.11, followed by key levels at $2,826.85 and $2,840.38. A decisive break above these thresholds could propel gold toward fresh highs as investor sentiment remains strong amid ongoing economic uncertainties.
On the downside, $2,772.24 remains critical support, with further downside risk extending to $2,748.57 and $2,730.88 if bearish momentum intensifies. The 50-day EMA at $2,757.74 continues to provide dynamic support, reinforcing the broader bullish structure.
Technical indicators suggest a strong buying bias above $2,788. The recent pullback found support at key technical levels, allowing buyers to re-enter the market. The upward trend remains valid as long as prices hold above $2,788. However, a sustained move below this level could shift sentiment, prompting a corrective pullback.
For now, traders are closely watching resistance at $2,814.11. If breached, the next upside targets are $2,826.85 and $2,840.38. Conversely, failure to hold above $2,788 may invite selling pressure, with a potential retest of lower support levels.
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