Gold prices dipped on Friday, giving back some gains from a strong three-day rally. Profit-taking pushed the metal down from near $2,700, while comments from Fed Governor Christopher Waller added market uncertainty. Waller’s suggestion that a March rate cut isn’t off the table surprised investors, raising questions about overlooked economic indicators and potential market shifts under the incoming Trump administration. The anticipation of inflation-driving executive orders from Trump further fuels this unease.
Market Drivers: A Mix of Tailwinds and Headwinds
Last year, gold benefited from several factors, including the Fed’s shift towards interest rate cuts, increased central bank purchases of the precious metal, and heightened geopolitical tensions. UBS Group AG recently projected that gold could reach new peaks later this year due to ongoing trade and geopolitical uncertainties.
Later today, the Commodity Futures Trading Commission (CFTC) will release its weekly Commitment of Traders (COT) report, which offers insights into speculative positions in futures markets. Last week’s report indicated a jump in these positions to $254.9K, up from $247.3K.
Meanwhile, the US 10-year yield is currently trading around 4.568%, a significant drop from its weekly high of 4.807% observed on Tuesday.
Technical Outlook: Waller’s Words Disrupt Bullish Momentum
Governor Waller’s comments regarding a possible March rate cut have tempered gold’s recent bullish run, raising questions about potential economic challenges. Traders are now watching the $2,708 level closely; failure to hold above it by Friday could trigger a drop to support at $2,671, then to the 55-day and 100-day SMAs at $2,648 and $2,643. Alternatively, a break above $2,721 could open the door to a retest of the all-time high of $2,790.
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