Gold price surges to $2,665 as U.S. economic data clouds uptrend potential
Gold holds gains near $2,665 but US dollar strength limits further upside potential
Gold prices are exhibiting a steady upward trajectory as they continue to challenge key resistance levels.
After rising 2% from its low on January 6 to reach $2,665 per ounce on January 7, the precious metal has remained strong, trading near that level as of January 8. However, a combination of robust US economic data and political remarks is putting pressure on gold's further gains.
Gold price dynamics (November 2024-January 2025). Source: TradingView
Gold's price surge on January 7 saw it test the Fibonacci 50% retracement level for the second time this month, reaching a high of $2,665. This surge proved significant as it attempted to surpass last week's peak at $2,666 per ounce, marking the potential for a fifth higher high in this ongoing uptrend. As the European trading session unfolds on January 8, the price remains near $2,665 challenged by the resistance at $2,666.
Gold price forecast: US dollar strength weighs on further gains
Technical indicators further support gold’s momentum. The 4-hour chart reveals that the Relative Strength Index (RSI) is holding above the 50 mark, indicating positive momentum, though it remains shy of overbought conditions. This suggests that while the market is leaning bullish, there is still room for upward movement without the risk of an immediate reversal.
Despite the technical optimism surrounding gold, external factors are tempering its price movement. The US economic data recently released revealed a solid labor market, with a strong jobs report and rising job openings. This has eased investor concerns about an economic slowdown, which in turn weighs on expectations for continued Federal Reserve easing. Additionally, business activity in the services sector showed notable improvement, further supporting the outlook for the US economy as well as the US Dollar.
This could limit any further immediate advances, especially if the US Dollar continues to strengthen on the back of solid economic data. Hence, gold is likely to remain within its current range, consolidating near key levels, particularly $2,665 and $2,666, as the market responds to strong US economic data and geopolitical factors.
Gold prices have maintained an uptrend since mid-December 2024 due to geopolitical risks and inflation. Elevated US Treasury yields and the Fed's hawkish stance on rate cuts have moderated the bullish momentum.
