Gold News: Will $2,663 Hold or Break? Fed Meeting Looms Over Gold Market

Gold Under Pressure as Fed Meeting Approaches

Gold prices faced downward pressure on Friday, straddling the 50-day moving average at $2,670.95. The precious metal remains in a critical retracement zone between $2,663.51 and $2,693.40, leaving traders closely watching for direction-setting moves. A sustained dip below $2,663.51 could expose $2,629.13, while a push above $2,693.40 may target $2,726.30, potentially triggering upward momentum.

Despite sliding over 1% from a five-week high, gold remains on track for a weekly gain, reflecting resilience as traders position ahead of the Federal Reserve’s upcoming policy meeting.

At 12:53 GMT, XAU/USD is trading $2671.06, down $9.77 or -0.36%.

U.S. Dollar and Treasury Yields Weigh on Gold

The U.S. dollar, bolstered by expectations of a slower pace of rate cuts in 2025, hovered near a two-week high, dampening gold’s appeal. The dollar index climbed 0.1% to 107.11, marking its best weekly performance in a month. Simultaneously, the 10-year Treasury yield edged up to 4.344%, exerting additional pressure on non-yielding gold.

Macroeconomic data reinforced the cautious Fed outlook, with wholesale prices rising 0.4% in November, while jobless claims indicated softening in the labor market. Core inflation remained elevated at 3.3% annually, further solidifying expectations for a December rate cut but suggesting a cautious path for 2025.

Fed Policy in Focus as Traders Eye December Meeting

The Federal Reserve is widely expected to cut rates by 25 basis points at its Dec. 17-18 meeting, a move already priced into markets. However, Fed Chair Jerome Powell’s commentary will be pivotal, with traders scrutinizing for signals on the pace of cuts in 2025. CME FedWatch Tool data reflects a 97% probability of a December cut but anticipates gradual easing into 2025.

Analysts suggest macro headwinds, including firm U.S. economic data and inflation above target, could cap significant gold rallies early next year. Nicky Shiels of MKS PAMP SA projects a softer U.S. dollar and lower real rates in the latter half of 2025, supporting a bullish long-term gold outlook.

Market Forecast

Near-term, gold prices face bearish risks if they fall below $2,663.51, potentially targeting $2,629.13. Conversely, breaking above $2,693.40 could reignite bullish momentum, aiming for $2,726.30.

While consolidation is likely in the short run, gold’s long-term trajectory remains positive, with projections for a potential climb toward $3,000 by 2025. Traders should prepare for heightened volatility tied to the Fed’s guidance and macroeconomic indicators.

More Information in our Economic Calendar.