Gold Hits $2,669: China Stimulus and U.S. Inflation Data in Focus
Gold prices extended their upward momentum on Tuesday, trading at $2,669.16, as China’s commitment to policy stimulus spurred optimism among investors.
The pledge from the world’s top gold consumer, coupled with renewed U.S. inflation data anticipation, has bolstered safe-haven demand. Additionally, signs of potential interest rate cuts from major central banks are reinforcing gold’s appeal as a hedge against economic uncertainty.
China’s Stimulus Sparks Gold Demand
China has announced plans to adopt a more “appropriately loose monetary policy” in 2025, alongside proactive fiscal measures to boost its economy. The shift marks a departure from its nearly 14-year “prudent” policy stance, with expectations for further interest rate reductions fueling gold’s rally.
Kelvin Wong, Senior Market Analyst at OANDA, highlighted that lower Chinese interest rates are likely to increase domestic gold demand. The resumption of gold purchases by China’s central bank after a six-month hiatus underscores this trend, with the country signaling robust support for the precious metal market.
Tensions between the U.S. and China are also adding to safe-haven demand. China’s probe into Nvidia for alleged anti-monopoly law violations could escalate into broader economic tit-for-tat measures, creating further uncertainties and driving interest in gold.
U.S. and ECB Rate Cuts Could Boost Gold
In the United States, market participants are closely monitoring November’s inflation data ahead of the Federal Reserve’s December 18 meeting. Stronger-than-expected payrolls data last week pushed the odds of a 25-basis-point rate cut to 89.5%, according to the CME FedWatch tool. Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold, further supporting its price.
Similarly, the European Central Bank is expected to reduce its deposit rate by 25 basis points at its policy meeting on Thursday, adding another bullish factor for gold’s outlook.
Technical Outlook: Key Gold Levels to Watch
Gold is consolidating above its pivot point of $2,666.02, supported by a symmetrical triangle breakout indicating bullish momentum. Immediate resistance lies at $2,692.23, with further targets at $2,704.38 and $2,718.19. On the downside, support is strong at $2,653.64, followed by $2,647.61 and $2,631.01.
- RSI at 61 reflects steady buying interest but signals potential short-term consolidation.
- 50-day EMA at $2,657 aligns with support levels, reinforcing the bullish outlook.
- Critical Levels: A break above $2,692.23 confirms further upside, while slipping below $2,653.64 could shift sentiment bearish.
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