- Gold prices rose ahead of the Trump administration due to risk aversion.
- The precious metal could be in trouble amid expectations that the Federal Reserve will impose a small cut in 2025.
- On Sunday, Israeli forces attacked two hospitals in northern Gaza.
Gold prices (XAU/USD) recently rebounded from the previous session, but trading volume was lighter than usual on the Monday ahead of the New Year holiday. Safe-haven gold is seeing bullish support as markets continue to mull concerns about the U.S. economy under Trump and the Fed’s approval of interest rate hikes in 2025. Demand for safe-haven gold could rise due to potential tariffs and trade policies that could lead to trade disputes and increase risk. However, the possibility of fewer Fed rate cuts in 2025 could limit appetite for interest-free gold.
Gold also received bullish support amid rising risks of regional instability due to ongoing conflicts in Russia and Ukraine and the ongoing crisis in the Middle East. On Sunday, the Israeli military attacked two hospitals in northern Gaza, including an attack on the upper section of the Wafa hospital in Gaza City, killing at least seven people and injuring scores more.
Gold prices are expected to end the year with a 27% increase, marking their best annual performance since 2010.
Gold Price Gains as US Dollar Struggles and Treasury Yields Drop
- The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against its six major peers, trades around 108.00, slightly below its highest level since November 2022. Traders continue to digest the US Federal Reserve’s (Fed) hawkish pivot. The Fed cut its benchmark interest rate by a quarter point at the December meeting, and the latest Dot Plots indicated two rate cuts next year.
- The non-interest-bearing Gold may receive support as US Treasury bond yields depreciate on Monday. 2-year and 10-year yields stand at 4.32% and 4.62%, respectively, at the time of writing.
- On Thursday, Russia’s Federal Security Service announced that it had thwarted multiple assassination plots by Ukrainian intelligence targeting high-ranking Russian officers and their families in Moscow. The agency stated that the attacks were planned using bombs disguised as power banks or document folders, according to Reuters.
- The Federal Reserve signaled a more cautious outlook for additional rate cuts in 2025, marking a shift in its monetary policy stance. This development highlights uncertainties surrounding future policy adjustments amid the anticipated economic strategies of the incoming Trump administration.
Gold Price Holds Above $2,600, Testing Nine-Day EMA
Gold prices were trading around $2,620.00 on Monday, with the daily chart showing prices trading near the 9- and 14-day exponential moving averages (EMAs) at a consolidation level. The 14-day relative strength index (RSI) is trading below 50, reflecting a neutral sentiment. A move above 50 could spark buying interest in the stock. Written on Dec. 12. A move toward these levels could trigger a sell-off that could push the price of gold to a one-month low of $2,583.39.
XAU/USD: Daily Trend Analysis
