Gold prices have been attempting a rebound this week, pushing towards the $2665 per ounce resistance level. However, this upward momentum stalled as the US dollar recovered, and gold prices have stabilized around $2650 at the time of this analysis. This price movement is happening amidst anticipation for key US economic events, including the release of the Federal Reserve meeting minutes today and important jobs data later this week.
What’s Driving Gold Prices?
Several factors are influencing gold’s current price fluctuations. According to trading platforms, gold has seen positive momentum due to uncertainty surrounding US tariff policy as we approach Trump’s inauguration. Additionally, the People’s Bank of China has increased its gold reserves for the second month in a row, signaling continued interest in the precious metal. Gold traders are closely watching upcoming US jobs data, including the crucial non-farm payrolls report, and analyzing the FOMC minutes for indications of future monetary policy. Generally, lower interest rates tend to benefit gold as a non-yielding asset, making the strength of the US dollar a significant factor in gold’s performance.
US Dollar Surges as Labor Market Shows Strength
The US dollar has rebounded to a two-year high, fueled by positive news about US job growth. This strong performance in the labor market, coupled with data from the Institute for Supply Management showing accelerating activity and rising prices, has intensified concerns about persistent inflation. These developments have dampened expectations for significant interest rate cuts by the Federal Reserve in the near future. December saw a surge in US service sector growth, which in turn boosted business activity and pushed prices to their highest levels since early 2023. Furthermore, US job openings in November exceeded expectations, reaching a six-month high of 8.098 million. Investors are now eagerly awaiting Friday’s US jobs report, which will be a critical factor influencing the Federal Reserve’s upcoming monetary policy decisions. Currently, financial markets are anticipating less than 50 basis points of total easing this year.
Treasury Yields Impact Gold’s Appeal
Another factor impacting gold is the rise in US Treasury yields. The 10-year US Treasury bond yield is hovering around 4.69%, maintaining an eight-month high. Strong economic data in the US has lowered expectations for substantial interest rate cuts by the Federal Reserve, thus supporting the increased yields. As Trump’s inauguration draws nearer, options indicate a potential rise in the 10-year Treasury yield to 5%, a level not seen since October 2023. Speculation that Trump’s policies may lead to rapid inflation and larger deficits has further contributed to the increase in the yield on the 10-year Treasury note, which has risen by about half a percentage point over the past month to nearly 4.7%. The surge in corporate bond issuance and US debt auctions also adds to the upward pressure on yields.
Trading Considerations
Despite the influence of the US dollar, factors such as global geopolitical tensions and central bank purchases are expected to remain important in supporting gold prices.
Technical Analysis and Price Outlook
According to today’s technical charts, the gold price is currently in a neutral position. For a bullish trend to emerge, gold prices need to break through the resistance levels of $2665 and $2685. This could propel gold towards the psychological peak of $2700, signaling a stronger grip for the bulls and possibly a new upward surge. Currently, technical indicators like the Relative Strength Index and the MACD are also neutral. However, if the price breaks below the support levels of $2628, $2615, and $2585, bears would seize control, and this could prompt gold investors to view lower prices as a buying opportunity.
Ready to trade today’s Gold forecast? Here are the best Gold brokers to choose from.