Gold, US Dollar, AUD/USD Technical Analysis: Trends Shaped by PCE and Fed Policies

The US dollar dropped on Friday following softer-than-expected US PCE inflation data. The headline PCE increased 2.4% year-over-year in November, falling short of market expectations. The PCE inflation data is shown in the chart below. On the other hand, core PCE inflation rose by 2.8% but remained unchanged from the previous month’s level. This data suggests cooling inflation, raising speculation about the Fed’s next move in 2025.

Moreover, AUD/USD remains under bearish pressure and hit the strong support zone around $0.62. The market awaits Tuesday’s Reserve Bank of Australia (RBA) Minutes. The RBA recently kept its Official Cash Rate at 4.35%. However, market sentiment tilts toward a potential rate cut in February, given the lack of inflationary pressure. This outlook could weigh on the Aussie despite the RBA’s cautious approach. The RBA’s approach is different from the Fed’s stricter stance, making the future of the AUD/USD pair uncertain.

Gold (XAU) maintained a positive tone on Monday, supported by US dollar weakness following the PCE report. However, the price continues struggling to recover from last week’s sharp decline. Softer inflation data provided a brief boost to gold, but the Federal Reserve’s hawkish outlook has capped further gains. Additionally, stronger US GDP growth and lower-than-expected jobless claims have reinforced expectations of tighter monetary policy in 2025. Consequently, gold prices remain steady, reflecting cautious optimism amid evolving economic conditions.

Gold (XAU) Technical Analysis

Gold Daily Chart – Price Uncertainty

The daily chart for gold shows that the price is consolidating within wide ranges in December. Despite this consolidation, the market remains bullish as the price trades above the red-dotted trend line. After the US PCE data release on Friday, the price closed above the 100-day SMA, reinforcing the bullish trend.

However, thin liquidity this week may keep gold in a tight consolidation. The bullish trend is intact as long as the price remains above the $2,500 zone, and any price correction is considered a buying opportunity. However, the short-term direction remains uncertain due to the holiday season in December, which results in thin liquidity.

Gold 4-Hour Chart – Consolidation

This price consolidation is also observed on the 4-hour chart. The consolidation range remains within the $2,550 to $2,720 price levels. A breakout from this range will likely initiate the next significant move in the gold market. The rebound following the PCE data release was driven by oversold conditions on the 4-hour chart, as indicated by the RSI.

US Dollar (DXY) Technical Analysis

UD Dollar Daily – Breakout from Strong Resistance

The daily chart for the US Dollar Index shows the breakout from the key level 107 following the Fed rate cuts in December. However, the core PCE data prompted a correction back to the breakout level. Technically, the index has broken the key level and maintains an upward bias. A double bottom and an inverted head-and-shoulders pattern on the daily chart further support the bullish trend. The levels of 105.60 and 107 serve as key support zones.

US Dollar 4-Hour Chart – Ascending Channel

The bullish trend in the US Dollar Index is also evident on the 4-hour chart. The index is trading within an ascending channel. The formation of an inverted head-and-shoulders pattern and the breakout from the blue dotted trend line indicate that the index is trending higher. The price correction following the PCE data has brought the index back to the blue-dotted trend line, signaling renewed buying interest. However, a break below 105.60 would negate the bullish trend and could initiate further downside movement toward 103.40.

AUD/USD Technical Analysis

AUD/USD Daily Chart – Bearish Pressure

The daily chart for AUD/USD shows strong bearish pressure on the Australian dollar. This bearish pressure has been further intensified by the strong surge in the US Dollar Index following the Fed rate cuts. The pair has now approached the expected $0.62–$0.63 support zone, signaling potential buying interest. Additionally, the RSI has reached oversold levels, indicating that the pair is oversold. A rebound from these levels is expected.

AUD/USD 4-Hour Chart –Descending Channel

The 4-hour chart for AUD/USD shows that the pair is trading within a descending channel. It is also approaching the support region, where a rebound is possible. The immediate resistance levels for this rebound are at the $0.6375 and $0.6420 regions. A break above $0.6420 could signal the start of an upward trend.