- XAU/USD remains above $2,600/oz but upside is still limited.
- Another argument regarding market risk is that the year-end recession caused gold prices to rise.
- Markets around the world will be largely closed on Wednesday for the New Year holiday.
XAU/USD remained under buying pressure in quiet trading on Tuesday, falling back to $2,625 an ounce after a rapid recovery from $2,600 earlier in the week. The economy has been trading in a subdued range for much of the holiday season as investors pulled out of the market for the year and waited for more important factors to take things to the next level.
Investors are having the time of their lives for much of 2024 as the global economy surges on the back of intense competition in the energy sector and stocks hit record highs. Gold has also had a stellar year, rising 40.61% from its October low to reach an all-time high of $2,790. Despite the November drop, XAU/USD has closed higher or higher in all but two of the past 11 months.
As the US dollar (USD) hits the bottom of the 2024 trading market, gold’s bullish momentum has fallen to just below $2,800, suggesting the relationship between the two assets remains strong. Improvements in the US Dollar Index (DXY) could prompt higher XAU/USD orders. On the downside, the advent of US President Donald Trump’s controversial policies could prompt investors to hope for a recovery in 2025, pushing the dollar toward safe-haven flows and pushing gold prices even higher.
XAU/USD Price Trend Analysis and Outlook
XAU/USD may be staunchly holding above $2,600 during the holiday season, but bidders remain constrained just below the 50-day Exponential Moving Average (EMA) drifting into $2,635. Bids are keeping their head above the waterline set at the last swing low into $2,560, but a recovery of December’s peak just north of $2,720 seems to be off the table in the near-term.
The immediate technical floor on another move lower is baked into the 200-day EMA near $2,485, while bidders will be looking for a full recovery to capture the top end and claim the $2,800 handle.
