Gold price struggles amid dollar strength despite bullish outlook
Gold price range-bound amid dollar strength and uncertainty over U.S. interest rates
Gold prices have been confined to a tight range between $2,600 and $2,670 per ounce over the past week and also reflects mixed market sentiment.
While technical patterns suggest long-term bullish potential, near-term dynamics like a stronger dollar and uncertainty over U.S. interest rates are keeping gains in check.
The precious metal edged slightly higher in Asian trading on Tuesday, with spot gold up 0.1% at $2,640.00 and February gold futures gaining 0.2% to $2,664.00. This modest recovery followed steep losses earlier in the week as the dollar gained strength. The greenback surged on Monday, bolstered by geopolitical concerns, including U.S. President-elect Donald Trump's tariff threats against the BRICS nations and political instability in France, which pressured the euro.
On the technical front, gold’s recent weekly bullish engulfing pattern aligns with its broader upward trend, suggesting long-term bullish sentiment. However, the daily chart’s bearish engulfing pattern highlights near-term selling pressure. The RSI reading above 50 indicates room for further upward movement, but the metal remains capped by near-term resistance at $2,670, with support firm at $2,600.
Gold price dynamics (November-December 2024). Source: TradingView
US monetary policy and payroll data to influence gold outlook
This week’s key focus lies on U.S. monetary policy and economic data and traders are now eyeing critical cues from Federal Reserve Chair Jerome Powell's speech and upcoming U.S. payrolls data for direction.
Powell’s remarks on Wednesday, along with Friday’s nonfarm payrolls data, are expected to shape the market’s outlook on interest rates. While the Fed is widely anticipated to cut rates by 25 basis points in its December meeting, persistent inflation and a resilient labor market have clouded the longer-term rate trajectory.
Adding to this uncertainty are expectations of expansionary and protectionist policies from the Trump administration, which could fuel inflation and keep rates elevated. For now, gold remains at the mercy of a volatile dollar and mixed macroeconomic signals, with traders bracing for potential price swings as the week unfolds.
Gold price dips 3% in November despite geopolitical tensions. The bearish tone continues, with prices breaking below key technical levels early on Monday.
