Gold price analysis: Bullish recovery persists despite headwinds from hawkish Fed
Gold rebounds to $2,620 amid geopolitical risks and Fed’s cautious rate outlook
Gold prices have shown resilience after rebounding from a four-week low of $2,580 per ounce on December 19 to trade near $2,620 during the early European session on December 24.
Despite Monday's dip to $2,610, the precious metal continues to maintain a bullish structure with higher intraday highs and lows, supported by easing US Treasury yields and ongoing geopolitical uncertainties.
Gold price dynamics (December 2024). Source: TradingView.
The Federal Reserve's indication last week of a slower pace of interest rate cuts in 2025 bolstered the US Dollar and posed challenges for non-yielding assets like gold, keeping its upward momentum in check. However, geopolitical risks, including the ongoing Russia-Ukraine war, tensions in the Middle East, and fears of a potential trade war, have continued to support gold's appeal as a safe-haven asset. These factors, coupled with thin trading volumes ahead of Christmas, have offered some stability to prices despite headwinds from the US dollar.
Outlook for gold as technical indicators signal potential hurdle
From a technical perspective, gold remains within a bullish channel. The four-hour chart shows that the Relative Strength Index (RSI) has recovered from oversold territory but remains below the mid-50 level, indicating a cautious momentum. Near-term resistance is seen at the 100-day Exponential Moving Average (EMA) at $2,640, which could limit further upside in the immediate term.
While gold prices have shown signs of recovery, the lack of follow-through buying suggests that sustained gains may require a break above $2,640. Conversely, any downside could see support near $2,580, the recent low. To gauge the next directional bias for the yellow metal, traders should closely monitor the US Treasury yields, dollar movements, and geopolitical developments.
The Federal Open Market Committee's updated monetary policy outlook reduced its 2024 interest rate cut projections. As a result, gold prices slipped below the $2,600 support level, marking a four-week low.
