Gold Price Struggles to Maintain Momentum Amid Hawkish Fed Outlook

Image Credit: FXSTREET

Gold (XAU/USD) maintains a positive bias during early European trading on Tuesday but struggles to extend its momentum, staying below the multi-day high reached on Monday. The US Dollar (USD) remains robust near a two-year peak, supported by the Federal Reserve's recent hawkish stance signaling a slower pace of interest rate cuts in 2025. This strength in the USD acts as a limiting factor for the non-yielding metal. Furthermore, a risk-on market sentiment weighs on Gold, capping its upside potential.

However, geopolitical tensions arising from the ongoing Russia-Ukraine conflict, Middle East unrest, and concerns over trade wars provide some support for the safe-haven asset. Additionally, a slight dip in US Treasury yields contributes to a mildly positive tone for Gold amid thin trading volumes typical of Christmas Eve. Despite this, a clearer buying signal is needed before confirming any meaningful recovery from the one-month low recorded last week.

From a technical standpoint, Gold's recent rebound from its monthly low, moving within an ascending channel, forms a bearish flag pattern on hourly charts. Daily chart oscillators remain in negative territory, indicating a bearish bias. A decisive break below the channel's support, located near the $2,605-$2,600 range, would signal further downside potential. This could lead to a retest of last week’s low at around $2,583, with continued selling pressure possibly driving prices toward November's swing low near $2,537-$2,536 and eventually the psychological $2,500 mark.

Conversely, resistance lies at the $2,633-$2,634 zone, which aligns with Monday's peak and the top boundary of the ascending channel. A sustained break above this barrier could trigger short-covering, lifting Gold toward the $2,654-$2,655 area. Clearing this key level would negate the bearish outlook and open the path for a move toward the $2,700 psychological threshold.

 

 

 

 

 

 

 

 

Paraphrasing text from "FXSTREET" all rights reserved by the original author.