Gold price rebounds above $2,600 after Fed rate cut signals limited adjustments
Gold holds $2,600 after Fed rate cut; $2,700 in sight
Gold prices experienced significant movement following the Federal Reserve's decision to cut interest rates by 25 basis points on December 18, 2024. After declining over 2% to a three-week low of $2,585 per ounce, prices have since rebounded above the psychological $2,600 level.
The Federal Reserve’s rate cut lowered the target range to 4.25%-4.5%. Fed Chair Jerome Powell’s statement highlighted the central bank's cautious approach due to persistent inflation pressures. While Powell noted the resilience of the U.S. economy and steady job growth, he acknowledged that progress toward the 2% inflation target has recently stalled. He also indicated the possibility of only two additional rate cuts in 2025, reducing earlier projections. This stance, which signals a more measured approach to rate adjustments, supported a stronger U.S. dollar and dampened the appeal of gold as a safe-haven asset.
Gold price outlook: $2,600 support holds as RSI turns bullish
However, the $2,585 level held firm due to the 100-day Exponential Moving Average (EMA) providing support. By December 19, technical indicators like the Relative Strength Index (RSI) on the 4hr chart also signaled potential recovery as it rebounded from oversold territory at 20 to around 40, reflecting renewed bullish momentum.
Gold price dynamics (September-December 2024). Source: TradingView
Gold has now climbed above $2,600 during the Asian and European trading sessions and is now hovering near $2,620. Market participants are eyeing $2,600 as a key support level in the near term. If the recovery continues, the next significant resistance level is projected at $2,700.Looking ahead, gold’s trajectory will likely depend on evolving market sentiment toward the Federal Reserve’s monetary policy and the ongoing geopolitical tension in the middle-east and in Europe. Traders should monitor price action closely around the $2,600 support and $2,700 resistance levels for further directional cues.
Gold 29% gain this year, coupled with ongoing central bank demand, supports a bullish long-term outlook. Recent price decline has the $2,600 support and 100-day EMA serving as key reversal points.
