Gold (XAU) Price Forecast: Bulls Target $2693.40 Breakout, Bears Eye $2663.51 Breakdown

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Updated: Jan 15, 2025, 14:23 GMT+00:00

Key Points:

Gold prices hover near $2686, with CPI data and Fed signals driving market uncertainty and influencing XAU/USD momentum.
Bulls target a breakout above $2693.40, signaling potential gains toward $2726.30 if resistance is cleared.
Failure to hold $2663.51 could shift momentum bearish, with $2644.52 as the next key downside target for gold traders.
Dollar weakness and easing Treasury yields boost gold’s appeal as CPI data looms as a critical driver for price action.
Inflation uncertainty, Fed policy outlook, and Trump’s proposed tariffs elevate gold’s status as a hedge asset.

Gold Prices Firm as Inflation Data Looms: What’s Next?

Gold prices inched higher on Wednesday, finding support at $2663.51, a critical 50% retracement level. While immediate resistance at the 61.8% level near $2693.40 may limit gains, a breakout above this point could pave the way for a rally toward $2726.30. Traders are watching these levels closely for signs of sustained bullish momentum.

Daily Gold (XAU/USD)

A failure to hold the $2663.51 pivot would signal a bearish turn, with the 50-day moving average at $2644.52 as the next downside target. A move below this threshold would shift sentiment toward the downside, amplifying selling pressure.

At 11:31 GMT, XAU/USD is trading $2686.81, up $9.30 or +0.35%.

Will the Dollar and Treasury Yields Continue to Support Gold?

Daily US Government Bonds 10-Year Yield

Gold’s modest rally was supported by a weaker U.S. dollar and a dip in Treasury yields. The 10-year Treasury yield eased by 2 basis points to 4.771%, pulling back from its recent 14-month high. Similarly, the U.S. dollar index edged lower by 0.1%, making gold more affordable for holders of other currencies.

Daily US Dollar Index (DXY)

This pullback in yields follows Tuesday’s data showing wholesale prices rose less than expected, easing fears of renewed inflation. However, markets remain cautious ahead of Wednesday’s Consumer Price Index (CPI) data, which is forecast to show a 2.9% annual increase.

What Will CPI Data Reveal About Fed Policy?

The CPI report, due at 13:30 GMT, is the week’s key economic release, providing clarity on the Federal Reserve’s interest rate outlook. A softer inflation reading could bolster the case for rate cuts later this year, a scenario that would likely support gold prices.

Conversely, a stronger-than-expected CPI print could limit rate-cut expectations, buoying the dollar and Treasury yields, which may weigh on gold. The Federal Reserve has maintained a cautious stance, signaling no immediate rate adjustments despite resilient labor market data.

How Does Trump’s Second Term Add to Gold’s Appeal?

Adding to the market’s cautious tone, traders are monitoring the upcoming inauguration of President-elect Donald Trump. His proposed tariffs on imports could stoke inflation, further complicating the Fed’s monetary policy outlook. These uncertainties have heightened gold’s allure as a safe-haven asset.

Will Gold Sustain Its Bullish Momentum?

Gold’s near-term direction hinges on its ability to sustain gains above $2663.51. A breakout above $2693.40 would likely trigger bullish momentum targeting $2726.30. However, failure to maintain this pivot could shift momentum to the downside, with $2644.52 as the next support.

Traders should remain alert to CPI data and Fed commentary, as these will heavily influence gold’s short-term trend in the coming sessions. For now, gold remains a favorable hedge amid ongoing inflation and geopolitical uncertainties.

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.