Gold Price Forecast: XAU Bullish Bias Holds Above $2,600 on Fed Outlook
“The market is in a holiday lull, and moves are exaggerated by thin liquidity,” said Kyle Rodda, a financial market analyst at Capital.com .
Recent U.S. economic data highlights a robust labor market, with jobless claims falling to a one-month low. This strength could pressure the Fed to maintain elevated rates, which traditionally weigh on gold. However, expectations of fewer rate cuts in 2025 continue to support the metal’s longer-term bullish outlook.
Gold, a key inflation and geopolitical hedge, has surged nearly 28% this year, touching an all-time high of $2,790.15 in October. Escalating tensions, such as Israel’s recent strikes on Yemen’s Houthi-controlled regions, further underscore gold’s safe-haven appeal.
XAU/USD [[-graph]]
Key Geopolitical and Policy Factors to Watch in 2025
As Donald Trump prepares to re-enter the White House in January 2025, markets are bracing for significant policy shifts. Proposed tariffs, deregulation, and tax changes could impact the U.S. economy, influencing the Fed’s monetary policy and, by extension, gold prices.
Meanwhile, geopolitical unrest remains a critical driver of gold demand. Israel’s airstrikes on Thursday, resulting in multiple fatalities, highlight the ongoing volatility in the Middle East. Such events often prompt investors to seek gold as a hedge against uncertainty.
Technical Outlook: Gold Spot (XAU/USD)
Gold continues to trade within a bullish framework, buoyed by an upward trendline above the $2,600 mark. Immediate resistance lies at $2,650, with further upside targets at $2,669 and $2,690. A breakout above these levels could confirm additional bullish momentum.
On the downside, support at $2,608 provides initial protection against bearish moves, followed by $2,587 and $2,567. The 4-hour chart shows a bullish crossover of the 50-day EMA at $2,630, reinforcing the positive sentiment.
The RSI stands at 56.90, suggesting room for further gains while maintaining a cautious optimism. Traders are advised to monitor the $2,650 resistance closely, as a breach could drive a more pronounced rally.
Key Insights:
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Bullish Momentum: Gold’s upward trendline supports its bullish bias above $2,600.
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Resistance Levels: Breakout above $2,650 could target $2,669 and $2,690.
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Technical Indicators: RSI at 56.90 and 50-day EMA reinforce short-term positivity.
Gold remains well-positioned for gains amid market uncertainties, with traders keeping a close eye on upcoming economic data and geopolitical developments.
