When it comes to Gold price trends, we need to consider all aspects that can affect its volatility. The geopolitical headwinds, including the ongoing conflict in Ukraine and rising tension in the middle east, continue to put pressure on gold prices. Additionally the US trade policies are adding to market anxiety, while a weaker dollar provides some respite and gold struggles to sustain its gains above the 2,640$ on its intraday of 7th jan,2025.
US President-elect Donald Trump’s tariff plans and protectionist policies will affect investors’ sentiment and concerns. This Goes along with a modest US Dollar (USD) that weakened slightly, thus lends some support to the precious metal.
Despite the potential of the uptrend, the gold price is being bound by the federal Reserve’s hawkish stance. The Fed has signaled that they would slow the pace of interest rate cut in 2025, which will give a boost to US Treasury bond yields. Higher yields for a longer time tend to strengthen the Us Dollar and diminish the appetite for non-yielding assets like Gold.
Furthermore, market participants are awaiting cautiously ahead of some key economic data release this week, including the FOMC meeting minutes and the Nonfarm Payrolls report.
XAUUSD’s Prices Caught Between Safe Heaven Demand and Fed’s Hawkish Stance:
- The high yield of the benchmark (10-years US treasury bonds) supported the US dollar’s High level, attracting dip-buying and subsequently capping gains for the XAU/USD on tuesday.
- This week the market focus will be on the release of the FOMC minutes and the closely watched US Nonfarm Payrolls (NFP) reporting on Wednesday and Friday.
- In the meantime, Tuesday’s US economic calendar-features the ISM services PMI and JOLTS job Opening data- which could drive further momentum in the North American session.
- China’s Gold reserves at the end of December stood at $191.34 billion VS $193.34 billion at end-November. (Central bank of china)
- Tariffs and protectionist policies proposed by the US president-elect Donald Trump, are expected to contribute to a more inflationary environment.
- On Saturday, Mary Daly (San Francisco Fed President) said” despite the significant progress in lowering consumer prices over the past two years, inflation remains not acceptable above the 2% target”.