Gold News: Bargain Hunters Lift Prices, but Downside Momentum Remains Strong

Gold Prices Recover After Federal Reserve’s Hawkish Stance

Gold prices edged higher on Thursday, recovering from a one-month low, as investors digested the Federal Reserve’s indication of slower rate cuts next year. After Wednesday’s sharp sell-off, bargain hunters capitalized on the lowest levels seen since November 18, helping the metal regain some lost ground.

At 12:52 GMT, XAU/USD is trading $2608.01, up $22.40 or +0.87%.

Technical Signals Point to Further Weakness in Gold Prices

Despite the recovery, the technical picture for gold remains bearish. Failure to sustain prices above the retracement zone of $2607.35 to $2629.13 has triggered downward momentum. The next significant support levels lie at $2538.50 and $2536.85, and a break below this range could push gold toward the 200-day moving average at $2470.18. Additionally, gold remains under pressure, trading beneath its 50-day moving average of $2670.37, indicating persistent selling pressure.

Federal Reserve Signals Caution on Rate Cuts

The Federal Reserve’s latest policy update suggests two potential rate cuts in 2025, a slower pace than markets had anticipated. Fed Chair Jerome Powell emphasized the importance of maintaining restrictive monetary policy to curb inflation, dampening expectations for a dovish turn.

While Powell downplayed the likelihood of future rate hikes, his comments still pressured gold initially, as the metal struggles in a high-interest-rate environment. However, gold rebounded as traders evaluated the broader implications of a gradual policy easing. Upcoming U.S. GDP and inflation data, including the core PCE index, will likely drive near-term market sentiment.

Geopolitical Risks and Inflation Concerns Lend Support

Economic uncertainties, including a potential U.S. government shutdown, have provided a supportive backdrop for gold. A prolonged shutdown could disrupt key government services and heighten investor demand for safe-haven assets. Elsewhere, the Bank of Japan held rates steady but signaled potential tightening in 2025, a move that could influence global liquidity conditions and gold demand.

Market Forecast

Gold prices are likely to face continued downside pressure in the short term, with momentum favoring a test of key support at $2536.85. A break below this level could signal further declines toward $2470.18. However, any economic or geopolitical developments that heighten uncertainty may limit losses and spur renewed safe-haven demand. For now, the outlook leans bearish, with caution warranted as markets await critical U.S. economic data.

More Information in our Economic Calendar.