Gold prices have maintained a bullish trajectory, benefiting from the Federal Reserve’s recent dovish stance. After hitting a five-week high earlier this week, the yellow metal eased slightly on Friday due to profit-taking. Despite this dip, gold remains well-positioned for gains, supported by expectations of further policy easing and weak U.S. economic data.
Fed Rate Cuts Bolster Gold
Recent U.S. core inflation data for December came in weaker than anticipated, reinforcing the likelihood of multiple Federal Reserve rate cuts in 2025. Market sentiment has shifted, now anticipating at least two cuts, with some Fed officials hinting at the possibility of three or four if economic data continues to weaken. This dovish outlook has fueled optimism for gold, as lower interest rates reduce the opportunity cost of holding non-yielding assets like gold.
Technical Indicators Highlight Strength
Gold’s technical outlook on the daily chart remains firmly bullish, signaling a continuation of upward momentum. The precious metal is set for a third consecutive weekly gain, adding to its positive near-term prospects. A sustained weekly close above the critical $2,700/$2,693 levels, which correspond to psychological resistance and the 61.8% Fibonacci retracement of the $2,790–$2,536 range, would confirm the bullish trend.
These levels now act as strong support, likely to contain minor dips and preserve the broader bullish sentiment. Immediate targets include $2,726 and $2,730, with further upside potential toward $2,749, a key double top from early November. The record high of $2,790, posted on October 31, remains the ultimate target for bullish traders.
Read: Bulls Dominate PSX as Index Soars Over 1,200 Points
Key Support and Resistance Levels
While the outlook is bullish, caution is warranted. A dip below $2,693 could signal a temporary pullback, though the broader bias would remain positive as long as support at $2,675 holds. This support level, reinforced by a broken bearish trendline and the rising 10-day moving average (10DMA), provides a safety net for gold bulls.
Key resistance levels to watch include:
- $2,726: December 12 lower top.
- $2,730: Fibonacci 76.4%.
- $2,749: November 5/6 double top.
Support levels to monitor are:
- $2,700: Psychological support.
- $2,693: Fibonacci 61.8%.
- $2,675: Rising 10DMA and broken trendline.
Broader Economic Considerations
Economists remain cautious, noting that potential U.S. economic growth under the Trump administration’s policies could introduce new dynamics. Tariff measures and other policies could reignite inflation, complicating the Fed’s dovish stance and impacting gold’s trajectory.
Outlook for Gold
Gold’s recent performance underscores its resilience amid economic uncertainty. While minor pullbacks may occur, the metal’s overall outlook remains strong as market conditions favor continued gains. Investors should closely watch key technical levels and Fed policy updates, as these factors will shape gold’s path in the coming weeks.
Gold remains a reliable asset for those navigating a volatile economic landscape, offering stability amid shifting monetary policies.
Follow us on Google News, Instagram, YouTube, Facebook,Whats App, and TikTok for latest updates
