- In the last trading session of the past week, gold prices retreated to $2639 an ounce after bulls managed to capture the resistance level of $2665 an ounce in the same shortened trading week due to holidays.
- Last year, spot gold prices managed to achieve gains of 27 percent and recently, gold prices have struggled to maintain momentum over the past month amid a strong US dollar and rising Treasury yields.
- According to gold trading platforms, gold prices rose by 1 percent last week.
US Dollar Gains Pressure Gold Prices
With the US Federal Reserve shifting to a more hawkish stance at last month's policy meeting and President Donald Trump proposing hefty tariffs, the US dollar has seen gains reaching its highest level in two years, putting pressure on the gold market. Furthermore, the Federal Reserve expects to cut US interest rates only twice in 2025 as inflationary pressures have raised concerns among policymakers.
According to forex trading, the US dollar index (DXY), a measure of the dollar against a basket of major currencies, fell to 109.15 last Friday. However, the index rose 1% last week, adding to its 6.5% gain over the past 12 months. The US dollar index is currently at a two-year high.
As is well known, a stronger US dollar is considered bearish for foreign investors because it makes it more expensive for them to buy.
Another factor affecting the gold market is that US Treasury yields have been rising since September, although they did not change much throughout the trading session on Friday. The yield on the 10-year note was steady at 4.571%. As is well known, rising bond yields are bearish for gold because they raise the opportunity cost of holding non-yielding bullion. Overall, the bearish outlook for the bond market represents a shift from the start of 2024. Meanwhile, many in the US markets were expecting a strong year of gains once the Federal Reserve began pulling US interest rates from their highest levels in more than two decades.
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Will gold prices rise in the coming days?
Gold market experts believe that the price of gold bullion could reverse in January based on historically strong seasonal demand. Consistently, January has seen the best price gains over the past 20 years as investors and asset allocators open new long positions, along with, of course, good jewellery buying for the holiday season.
Trading Tips:
Keep in mind that gold's gains in 2024 give a positive impression for its continued gains in the new year, as geopolitical tensions are increasing and central banks' demand for gold is still strong
Gold Price Technical Analysis and Expectations Today:
The gold price trend is still tilted upwards, and the bulls' dominance will strengthen according to gold analysts' expectations if prices move towards resistance levels of $2665, $2680, and $2700 respectively. Conversely, and over the same timeframe, the daily chart will look for new buying opportunities for gold investors if gold prices retreat to support levels of $2622, $2605, and $2585 respectively. Therefore, we still prefer buying gold from every dip. Technically, the Relative Strength Index is currently in a neutral position and will change its direction upwards if the bulls manage to reach the top of $2700 an ounce. As for the MACD indicator, it has more time to turn upwards.
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