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Gold prices are holding steady above $2,630 per ounce as the US Dollar maintains its strength. The Federal Reserve has signaled a slower pace of interest rate cuts next year, reducing upward pressure on Gold. This, coupled with the recent rise in US Treasury yields, is weighing on the precious metal that is 0.64% higher on the day, trading at $2,633 per ounce at the time of writing.
Market Dynamics:
Dollar Strength: The US Dollar remains robust, supported by expectations of fewer interest rate cuts from the Federal Reserve.
Yield Rise: The recent Summary of Economic Projections, which indicated a slower pace of disinflation, has pushed US Treasury yields higher. This increase in yields, representing the opportunity cost of holding non-yielding assets like Gold, is contributing to the metal’s weakness.
Fed Outlook: Fed officials have hinted at a terminal rate of 3.9% by the end of 2025, suggesting a more gradual path for monetary easing.
Economic Data: Upcoming economic data releases, such as Initial Jobless Claims and Nonfarm Payrolls, will provide further insights into the labor market and influence Fed policy decisions.
Technical Factors:
Support Test: XAU/USD is currently testing the critical 100-day Simple Moving Average (SMA) support level at $2,610.
Downside Risk: A sustained break below this support could signal further downside potential for Gold.
Resistance: Any potential bounce could face resistance near the $2,650-$2,670 range.
Gold prices are facing downward pressure as the US Dollar strengthens and interest rate cut expectations moderate. The market is closely watching the 100-day SMA support level for any signs of a reversal or continuation of the bearish trend.
