Gold News: Bulls Eyeing 50-Day Moving Average Breakout as Dollar Plunges

Gold Prices Steady as Yields Rise and Dollar Weakens

Gold prices held firm on Monday, reversing early losses as traders assessed the impact of rising U.S. Treasury yields against a weaker dollar. The market’s attention is now on upcoming U.S. economic data, which could influence the Federal Reserve’s approach to interest rates.

At 12:55 GMT, XAU/USD is trading $2643.39, up $3.665 or +0.14%.

Technical Levels to Watch for Gold

Gold is currently testing key technical levels, trading near $2656.16, the 50-day moving average that capped last week’s rallies. If bullish momentum continues and this barrier is breached, gold could advance towards the $2663.51-$2693.40 retracement zone. Beyond this, $2726.30 marks the next significant resistance.

On the downside, initial support lies between $2629.13 and $2607.35, which has already halted selling pressure earlier in the session. A break below this zone may trigger further losses, increasing the likelihood of a retest towards $2600.

Economic Data and Fed’s Rate Path Under Scrutiny

Gold’s movement is closely tied to U.S. economic indicators this week. Traders await the JOLTS job openings report on Tuesday, ADP employment data on Wednesday, and the Federal Reserve’s meeting minutes. Friday’s nonfarm payrolls report is the focal point, expected to provide clarity on labor market conditions and influence the Fed’s policy stance.

Rising yields, with the 10-year Treasury yield hovering near 4.634%, reflect market skepticism regarding aggressive Fed rate cuts in 2025. Analysts at Goldman Sachs have adjusted their gold price forecast, pushing their $3,000 target to the second quarter of 2026 due to fewer expected rate cuts.

Inflation Risks and Trump’s Economic Policies

The dollar weakened by 1% following reports that President-elect Donald Trump may limit tariffs to critical sectors, easing fears of widespread trade restrictions. This news softened inflation expectations, though tariffs remain a potential inflation driver, which could indirectly support gold as a hedge.

Higher inflation, combined with persistent geopolitical risks, continues to provide underlying support for gold, though easing tensions in the Middle East may limit safe-haven buying in the near term.

Market Forecast: Cautious Optimism with Key Resistance Ahead

Gold prices are likely to stay range-bound in the near term, with $2656.16 as a critical pivot point. A decisive break above could drive gold towards $2700, while failure to hold support at $2607.35 may lead to short-term weakness. Traders will watch economic data closely for signals on the Fed’s next move, positioning gold as a barometer for inflation and monetary policy expectations.

More Information in our Economic Calendar.