Gold maintained its strength this week, driven by optimism around potential Federal Reserve rate cuts and easing inflation pressures. Supportive signals from policymakers, combined with a weaker US dollar and falling Treasury yields, bolstered gold’s appeal as a safe haven. Despite signs of slowing momentum, the precious metal remains a key focus for traders navigating an evolving economic landscape.
Gold rallies on Fed rate cut hopes
Gold (XAU/USD) stabilised on Friday, trading at USD 2,710.20, slightly below Thursday’s one-month peak of USD 2,724.73. The pair has risen 1% this week, marking its third consecutive week of gains.
The rally has been driven by expectations of Federal Reserve rate cuts, supported by lower inflation figures and dovish commentary from policymakers.
Richmond Federal Reserve President Thomas Barkin emphasised reduced inflationary pressures in December, while Fed Governor Christopher Waller suggested the possibility of three to four rate cuts this year, should economic conditions deteriorate.
Federal Reserve Governor Christopher Waller said the US central bank could lower interest rates again in the first half of 2025 if inflation data continues to be favorable https://t.co/ZTju0VBxJ6
Declining Treasury yields and a softer US dollar further supported XAU/USD. Despite SPDR Gold Trust holdings falling by 0.43% to 868.78 tonnes, the pair maintained its upward trajectory, reinforcing its role as a hedge against inflation in an evolving monetary landscape.
Technical analysis
On the 15-minute chart, XAU/USD remains on an upward trend, closing at USD 2,710.20 with a 0.57% gain.
XAU/USD climbs to 2710.20 with bullish momentum slowing after reaching a high of 2724.73 as seen on the VT Markets app.
The price surged from a low of USD 2,676.70 to a high of USD 2,724.73, surpassing key resistance levels before consolidating around the USD 2,710 zone.
Short-term moving averages (5, 10, and 30 periods) indicate a bullish alignment, with the shorter-term averages leading gains.
However, the MACD histogram reveals waning bullish momentum as the green bars shrink and the MACD line flattens near the signal line.
This suggests the potential for either consolidation or a retracement in the short term, reflecting a cautious sentiment despite recent gains.
Key drivers to watch
The next moves in XAU/USD will depend heavily on upcoming US retail sales and industrial production figures, which may shape market expectations regarding the Federal Reserve’s policy direction.
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