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Gold News: XAU Holds Steady as Dollar Slips, 50-Day Moving Average in Focus
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Key Points:
- Gold prices rise as the dollar weakens, but resistance at $2653.94 holds firm, limiting further upside potential.
- A break above the 50-day moving average could push gold toward $2663.51, with $2693.40 as the next major resistance level.
- Downside pressure may lead to a retest of the $2629.13 to $2607.35 support zone, holding strong for the past two weeks.
- China’s central bank boosts gold reserves for the second month, signaling ongoing demand and market confidence.
- Traders await U.S. economic data, including job reports and PMI, to gauge potential shifts in Federal Reserve policy.
In this article:
Gold Prices Rise as Dollar Weakens but Face Key Resistance Levels
Gold prices edged higher on Tuesday, driven by a weaker U.S. dollar, but the metal remains below the 50-day moving average at $2653.94, which continues to act as a critical resistance point. A break above this level would signal strength, but further upside will likely be challenged by the retracement zone between $2663.51 and $2693.40.
On the downside, continued pressure could lead to a retest of the key support zone at $2629.13 to $2607.35, a level that has held firm over the past two weeks, including on Monday’s session.
The dollar’s retreat on Tuesday provided much of the lift for gold. Uncertainty surrounding President-elect Donald Trump’s tariff policies contributed to the dollar’s softening, with the greenback hovering near a one-week low against major currencies. Reports indicating Trump’s tariffs may be less aggressive than previously signaled led to investor speculation, further weighing on the dollar.
Trump, however, denied these reports, injecting further uncertainty into the outlook for U.S. trade policy. This ambiguity has kept traders cautious and bolstered gold’s appeal as a hedge against potential economic disruptions.
China’s Gold Reserves Boost Market Sentiment
China’s central bank continued its gold purchases for the second consecutive month, with reserves standing at 73.29 million fine troy ounces by the end of December. This ongoing accumulation highlights strong demand from one of the world’s largest gold consumers. Analysts view this as a supportive factor for gold prices, reinforcing expectations that central bank demand will remain a pillar of strength for the market.
“By re-entering the market in December, Beijing signaled that its gold acquisition program remains active—a development likely to lend continued support to the precious metal’s price,” said Ricardo Evangelista, senior analyst at ActivTrades.
Traders Await Key U.S. Economic Data
Markets are also eyeing a series of U.S. economic indicators this week. Job openings data (JOLTs) and ISM’s services PMI are due Tuesday, while ADP employment figures will follow on Wednesday. The week will culminate with Friday’s nonfarm payrolls report, which could significantly influence the Federal Reserve’s policy outlook.
Treasury yields remained steady ahead of the data releases, with investors waiting for further signals on the health of the U.S. labor market and inflationary trends. Fed Governor Lisa Cook recently indicated that the central bank could afford to take a cautious stance on rate adjustments, given the resilience of the U.S. economy and persistently high inflation.
Gold Prices Forecast
Gold’s near-term outlook hinges on breaking through the 50-day moving average. A decisive move above $2653.94 could open the path to $2663.51 and beyond. However, failure to clear this resistance could see gold revisit the $2629.13 to $2607.35 support zone.
With uncertainty surrounding U.S. trade policies and ongoing central bank buying, gold prices are likely to remain well-supported in the coming sessions. Traders will closely monitor economic data for further clues, but the current environment leans slightly bullish for gold as dollar weakness persists.
More Information in our Economic Calendar.
About the Author
James Hyerczykauthor
James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.
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