Gold futures dip as geopolitical support balances Fed hawkishness
Press Hub UCapital
Share:
Gold futures edged lower on Friday, trading at $2,642.20 per troy ounce, down 0.4%. Despite the decline, prices remain flat for the week amid subdued holiday trading, as geopolitical tensions bolster safe-haven demand, while a hawkish Federal Reserve limits upside potential.
Key Market Dynamics
Safe-Haven Demand Provides Support
Geopolitical tensions persist, with the Middle East situation remaining uncertain, the Russia-Ukraine conflict ongoing, and strained U.S.-China relations. Gold continues to attract investors seeking stability amid these global uncertainties.
Federal Reserve Hawkishness Caps Gains
Fewer interest rate cuts expected in 2025, as indicated by the Fed's December policy meeting, limit gold’s appeal. Higher interest rates reduce demand for non-yielding assets like gold, as they make other investments more attractive.
Technical Overview
Support Levels
$2,640 serves as immediate support, with stronger support near $2,620, marking the lower bound of recent trading.
Resistance Levels
$2,650 is the key resistance level, with a breakout potentially driving prices toward $2,680.
Narrow Trading Range
Gold has traded within a tight range during the holiday week, reflecting cautious sentiment and thin liquidity in the market.
Outlook and Strategy
Geopolitical Risks to Dominate Sentiment
Gold’s near-term trajectory will likely hinge on developments in geopolitical hotspots, particularly the Middle East and Eastern Europe.
Fed Policy and Economic Data
Investors will monitor U.S. economic data and Fed commentary for indications of rate-cut timing in 2025, which could shift gold’s attractiveness as a safe-haven asset.
Trading Strategy
Short-Term: Focus on the $2,640-$2,650 range; a break in either direction could signal near-term momentum.
Long-Term: Geopolitical risks and inflation concerns may provide sustained support for gold, but rising rates remain a headwind.
While gold prices have been steady this week, the interplay of geopolitical support and Fed-driven resistance suggests a cautious trading environment as 2024 concludes.
Key Market Dynamics
Safe-Haven Demand Provides Support
Geopolitical tensions persist, with the Middle East situation remaining uncertain, the Russia-Ukraine conflict ongoing, and strained U.S.-China relations. Gold continues to attract investors seeking stability amid these global uncertainties.
Federal Reserve Hawkishness Caps Gains
Fewer interest rate cuts expected in 2025, as indicated by the Fed's December policy meeting, limit gold’s appeal. Higher interest rates reduce demand for non-yielding assets like gold, as they make other investments more attractive.
Technical Overview
Support Levels
$2,640 serves as immediate support, with stronger support near $2,620, marking the lower bound of recent trading.
Resistance Levels
$2,650 is the key resistance level, with a breakout potentially driving prices toward $2,680.
Narrow Trading Range
Gold has traded within a tight range during the holiday week, reflecting cautious sentiment and thin liquidity in the market.
Outlook and Strategy
Geopolitical Risks to Dominate Sentiment
Gold’s near-term trajectory will likely hinge on developments in geopolitical hotspots, particularly the Middle East and Eastern Europe.
Fed Policy and Economic Data
Investors will monitor U.S. economic data and Fed commentary for indications of rate-cut timing in 2025, which could shift gold’s attractiveness as a safe-haven asset.
Trading Strategy
Short-Term: Focus on the $2,640-$2,650 range; a break in either direction could signal near-term momentum.
Long-Term: Geopolitical risks and inflation concerns may provide sustained support for gold, but rising rates remain a headwind.
While gold prices have been steady this week, the interplay of geopolitical support and Fed-driven resistance suggests a cautious trading environment as 2024 concludes.