Gold Prices Rise to $2,652 as Fed Rate Decision Looms
Gold prices rose modestly on Monday as market participants braced for the U.S. Federal Reserve’s interest rate decision, with expectations of a quarter-point cut dominating sentiment.
Spot gold climbed 0.1% to $2,652.07 per ounce as of 0155 GMT, while U.S. gold futures dipped slightly by 0.2% to $2,670.90.
Investor consensus currently places a 93.4% chance on a 25-basis-point rate cut during the Dec. 17-18 meeting, according to the CME FedWatch tool. However, market uncertainty lingers over whether policymakers will adopt a “hawkish cut,” potentially holding rates steady into January to assess inflation and economic resilience.
Yeap Jun Rong, a strategist at IG Markets, noted, “The focus will be on the Fed’s language regarding rate adjustments in 2024, especially amid above-target inflation and geopolitical uncertainties.” Lower interest rates typically favor non-yielding assets like gold, which perform well during economic ambiguity.
Geopolitical Tensions Support Gold Prices
In addition to monetary policy, ongoing geopolitical concerns have provided further support for gold. Over the weekend, Israeli strikes in Gaza claimed at least 53 lives, including a journalist and rescue workers. Meanwhile, the Israeli military reported significant operations in the northern enclave, including the elimination of militants and capture of several combatants.
Historically, gold has been a safe-haven asset during times of geopolitical instability. As conflicts intensify, investors seek refuge in bullion, amplifying demand and stabilizing prices above key technical levels.
Technical Outlook: Key Support and Resistance Levels
On the technical front, gold is trading near critical support levels, maintaining a cautious upward trend. After failing to sustain gains above the 50-day EMA at $2,680, prices are testing the ascending trendline at $2,648, which serves as immediate support. A decisive close below this level may accelerate declines toward the next supports at $2,624 and $2,592.
On the upside, resistance stands at $2,669, with additional hurdles at $2,680 and $2,721. A break above these levels could revive bullish momentum, targeting higher ground near $2,749.
The Relative Strength Index (RSI) is currently at 38.39, signaling bearish momentum and approaching oversold conditions, which may trigger a technical rebound. Traders are closely watching price movements near the 50 EMA for signs of recovery.
Key Insights:
- Support Levels: Immediate at $2,648; next at $2,624 and $2,592.
- Resistance Levels: Immediate at $2,669; higher targets at $2,680 and $2,721.
- Indicators: RSI at 38.39 indicates bearish momentum, nearing oversold conditions.
Gold’s price direction will depend on the Fed’s rate outlook and ongoing geopolitical events, making it a crucial asset to monitor this week.
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