Gold holds steady in holiday trading, weighed by geopolitical risks and a robust Dollar.
- Geopolitical risks in the Middle East and Ukraine drive safe-haven demand for gold, though its gains are capped by a strong US dollar.
- The rise in US bond yields, with the 10-year Treasury reaching its highest level since May, further curbs gold’s momentum.
- Low holiday trading volumes keep gold confined within a range in the short term, preventing significant price movements.
Gold prices have risen to the $2,620 range, bolstered by geopolitical risks and a slight easing in US Treasury yields. Heightened safe-haven demand stemming from tensions in the Middle East and Ukraine has spurred increased interest in gold. However, the Federal Reserve’s hawkish stance, indicating a more gradual approach to interest rate cuts in 2025, curbs the potential for substantial price gains.
Conversely, the US dollar’s strength continues to exert downward pressure on gold prices. The impact is compounded by rising US bond yields, with the 10-year Treasury hitting its highest level since May. While geopolitical tensions and safe-haven demand offer near-term support, gold’s upside remains constrained by the robust dollar and elevated bond yields.
Holiday-thinned trading volumes further limit significant price movements.
Market attention will turn to the Richmond Manufacturing Index for additional clarity on the US economy and monetary policy. This data, alongside evolving geopolitical developments, is expected to shape gold’s trajectory for the week.
Gold remains steady amid holiday-season trading
The 1-hour gold chart indicates a bearish short-term structure, with prices trading below a descending trendline. A death cross has formed as the 50-period SMA crossed below the 200-period SMA, signaling potential downside pressure. However, gold rebounded from its lows following the release of US PCE data, which triggered a sharp pullback in the US Dollar Index.
The RSI hovers near 50, reflecting neutral momentum without clear overbought or oversold conditions. Gold is consolidating around $2,617, but trend line resistance and overhead moving averages suggest limited upside potential unless a breakout occurs above the descending trend line. A sustained move above $2,650 could indicate further bullish momentum, while failure to breach higher may lead to renewed selling pressure.
In summary, gold prices are shaped by a combination of safe-haven demand, geopolitical tensions, and broader macroeconomic dynamics. While a recent dip in US Treasury yields and increased safe-haven flows have offered near-term support, the Federal Reserve’s hawkish outlook, a robust US dollar, and rising bond yields continue to limit significant upward movement.
Holiday-thinned trading volumes further contribute to the lack of clear directional momentum. This week, gold’s trajectory will be guided by US economic data, including the Richmond Manufacturing Index, and evolving geopolitical events. A breakout above key resistance levels will be crucial to confirm a sustained bullish trend.