Gold Prices Poised for Weekly Gain Amid Fed’s Rate Decision and China Demand
Gold prices have gained momentum this week, climbing to $2,686 and heading for a notable weekly gain.
The surge is largely attributed to China, the world’s largest gold consumer, resuming gold purchases. This development, paired with heightened market expectations of a 25-basis-point interest rate cut by the Federal Reserve at its upcoming December 17–18 meeting, has fueled optimism in the bullion market.
According to CME’s FedWatch Tool, traders see a 96.4% probability of the Fed delivering the anticipated rate cut. If executed, this move will support gold, which typically thrives in low-interest-rate environments.
Analysts suggest that while gold may face temporary selling pressure, the overall outlook remains favorable due to its safe-haven appeal during economic uncertainty.
“The Fed’s rate decision and the dot plot shift could weigh on gold briefly, but it won’t be a huge surprise,” commented Matt Simpson, senior analyst at City Index.
Inflation Data and Global Rate Cuts Boost Gold
This week’s inflation reports provided further impetus for gold prices. U.S. consumer prices saw their sharpest rise in seven months during November, driven by higher food costs. Additionally, U.S. producer prices also exceeded expectations, reinforcing speculation of the Fed’s impending rate cut.
On the global stage, the European Central Bank reduced interest rates for the fourth time this year, while the Swiss National Bank implemented its steepest cut in nearly a decade, slashing rates by 50 basis points. These dovish monetary policies across major economies create a supportive backdrop for gold’s rally.
However, gold faced a 1% drop on Thursday due to profit-taking after briefly reaching a five-week high earlier in the session. This volatility highlights the delicate balance between bullish sentiment and trader caution.
Key Market Insights for Traders
Interest Rate Outlook: 96.4% chance of a 25-basis-point Fed rate cut.
Inflation Data: U.S. consumer prices rose significantly, signaling more easing ahead.
Global Central Banks: ECB and SNB rate cuts create a favorable environment for gold.
Traders are also keeping an eye on China’s sustained gold purchases and geopolitical risks, both of which could further elevate demand for the metal.
Daily Technical Outlook: Gold Spot/U.S. Dollar (XAU/USD) – December 13, 2024
Gold prices are consolidating near $2,686, hovering above the psychological pivot point at $2,685. The symmetrical triangle pattern signals potential breakout momentum, with immediate resistance at $2,726 and next levels at $2,749 and $2,774. On the downside, immediate support lies at $2,647, followed by $2,616 and $2,581.
The 50 EMA at $2,676 underpins the trend, acting as dynamic support. The RSI is neutral at 51, indicating equilibrium between buyers and sellers. A decisive move outside the triangle could dictate near-term direction, with bullish momentum favoring $2,749 and bearish sentiment targeting $2,616.
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