Gold price uptrend tamed due to Trump tariff remarks and Treasury yields
Gold climbs to $2,666 before pullback, eyes $2,655 resistance as traders await FOMC minutes
Gold prices have continued to climb, sustaining an uptrend marked by higher highs and higher lows on the 4-hour chart since mid-December 2024.
The safe-haven metal remains supported by a confluence of geopolitical risks, inflation expectations tied to President-elect Donald Trump’s policies, and a recent pullback in the US Dollar. However, elevated US Treasury yields and the Federal Reserve’s hawkish stance on rate cuts for 2025 have tempered the bullish narrative.
XAU/USD price dynamics (November 2024-January 2025). Source: TradingView.
Though the current uptrend which began at $2,580 in mid-December saw Gold reach a fourth higher high of $2,666 per ounce on January 2nd. A subsequent pullback brought prices to an upward trendline support at $2,615 on January 6th, coinciding with headlines that President-elect Trump may consider broader tariffs on critical imports. However, this news was later clarified by Trump himself, suggesting tariffs would remain in their original form, alleviating market concerns.
Gold price outlook: FOMC minutes to offer clarity despite uptrend
As of January 7th, Gold is trading near $2,640, challenging the 200 EMA on the 4-hour chart. A break above this moving average could pave the way toward the next resistance at the Fibonacci 50% retracement level near $2,655. Failure to clear this level may see the price retesting the upward trendline, offering another opportunity for bullish continuation.
Technical indicators provide further evidence of bullish momentum. The RSI has risen above 50, suggesting increased buying interest and the potential for further upward price action. Yet, gains remain capped by persistent strength in US Treasury yields, buoyed by the Fed's firm stance on monetary policy.
Looking ahead, the release of the FOMC minutes this Wednesday has become the focal point for traders because it can provide clarity on the Fed’s policy direction and its implications for Gold prices. That said, inflationary expectations, geopolitical risks, and the technical indicators suggest an optimistic outlook for the precious metal.
Gold started 2025 with a brief rally above the 50-day EMA, but momentum quickly faded, leading to a decline by January 6. The metal's drop aligned with the US Dollar Index reaching a three-year high.
