Gold prices remain stable near $2,669, supported by investor concerns about U.S. inflation and potential shifts in Federal Reserve policy. A strong U.S. jobs report last week bolstered the dollar, making gold more expensive for non-dollar buyers. However, inflation worries—fueled by economic policies under President-elect Donald Trump—have helped maintain gold’s resilience.
Tim Waterer, Chief Market Analyst at KCM Trade, noted, “Gold is performing better during this dollar strength phase due to inflationary concerns.” Gold’s traditional role as an inflation hedge is increasingly attractive during periods of economic uncertainty. Investors are now awaiting key inflation data, including the Producer Price Index (PPI) and Consumer Price Index (CPI), to assess the Federal Reserve’s likely policy direction for 2025.
Gold Technical Outlook: Key Levels to Watch
Technically, gold prices have found support near $2,658, with the 50-day Exponential Moving Average (EMA) at $2,668 serving as a critical level. The pivot point at $2,675 is pivotal—if gold breaks above this, it could test higher resistance levels at $2,697 and $2,709, with additional resistance at $2,721.
Failure to hold above $2,675 could result in a pullback toward support at $2,658, with further levels at $2,641 and $2,624. While the broader upward channel remains intact, neutral momentum, indicated by the Relative Strength Index (RSI), suggests that price movement could swing in either direction depending on inflation data and Federal Reserve signals this week.
Inflation Data and Fed Signals Could Shape Gold’s Path
This week’s inflation reports will be crucial for the outlook on gold prices. Softer CPI data could weaken the dollar, making gold more attractive and boosting demand. On the other hand, higher inflation could reinforce the Fed’s hawkish stance, potentially putting downward pressure on gold.
Fed officials are also set to speak, offering additional clarity on their interest rate outlook for 2025. As Waterer highlighted, “Softer inflation data could put downward pressure on the dollar and boost gold.”
Conclusion
Gold’s price trajectory will largely depend on upcoming inflation data and the Federal Reserve’s policy signals. If inflation remains soft, gold could benefit from a weaker dollar and growing demand. Conversely, stronger inflation figures might push the Fed to maintain a hawkish stance, pressuring gold prices. Investors will closely monitor this week’s economic reports and Fed communications for clues on gold’s next move.