Gold News: Bullish Sentiment Builds as Gold Holds Above Key $2629 Support

Gold Prices Gain as Traders Weigh Trump Policies and Fed Outlook

Gold prices rose on Thursday, breaching key resistance levels and signaling further upside potential as investors assessed the implications of President-elect Donald Trump’s policies on inflation and Federal Reserve strategy. Gold crossed above the retracement zone of $2629.13 to $2607.35, turning it into new support. This move positions bullion for a test of the 50-day moving average at $2659.15, with further upside targeting the $2663.51 to $2693.40 retracement zone.

At 11:52 GMT, XAU/USD is trading $2721.90, up $28.89 or +1.07%.

Gold Supported by Political and Economic Uncertainty

Investor sentiment remains anchored in expectations that Trump’s proposed tariffs and protectionist trade measures could drive inflation, reinforcing gold’s appeal as a hedge. Since mid-November, gold prices have traded within a defined range of $2583.91 to $2726.30, and a breakout is anticipated once clearer signals emerge from the new administration and the Fed’s January 28-29 meeting. The Fed’s cautious stance on rate cuts, driven by inflation above 2%, is another key factor underpinning gold.

In 2024, gold posted a 27% gain, its strongest annual performance since 2010, driven by robust central bank purchases, geopolitical tensions, and a Fed rate-easing cycle. These factors are expected to persist in 2025, providing a bullish foundation for further price appreciation.

Focus on Treasury Yields and Economic Data

U.S. Treasury yields dipped on Thursday as bond markets reopened, reflecting investor caution ahead of incoming economic data. The 10-year yield ended 2024 above 4.5%, with choppy movements throughout the year. Traders are closely monitoring jobless claims and manufacturing data for further insight into economic health. The Fed’s December signals of limited rate cuts in 2025 suggest gold could continue benefiting from a high-rate environment that pressures equity markets.

Dollar Pressure and Foreign Exchange Trends

The dollar weakened slightly to start 2025, with the yen recovering modestly from five-month lows. Currency markets remain focused on the widening interest rate gap between the U.S. and other economies, driving demand for the greenback. However, a potential slowdown in U.S. growth later in the year could challenge prolonged dollar strength, indirectly supporting gold prices.

Market Forecast: Bullish Outlook for Gold

Gold’s technical position suggests further gains in the short term, with the market eyeing $2659.15, the 50-day moving average and beyond. Traders are likely to position cautiously ahead of Trump’s inauguration on January 20 and the Fed’s January meeting. Inflationary pressures and geopolitical risks continue to favor gold as a safe-haven asset, reinforcing bullish sentiment into the first quarter of 2025.

More Information in our Economic Calendar.