Gold Price Forecast: Will $2,608 Support Hold Amid Dollar Strength?

Gold price dropped over 3% to $2,605 amid dollar strength, and Treasury yields rose, pressuring prices.

Market Overview

Gold price (XAU/USD) fell over 3% on Tuesday, reaching an intra-day low of approximately $2,605, driven by a stronger U.S. dollar and rising Treasury yields. This decline followed the nomination of Scott Bessent as U.S. Treasury Secretary, which lifted global sentiment and increased interest in riskier assets.

Additionally, easing geopolitical tensions, particularly reports of a potential ceasefire in Lebanon, diminished gold's appeal as a good asset. The market is closely monitoring the Federal Reserve's upcoming decisions, with the release of the FOMC meeting minutes anticipated to offer crucial insights.

Gold continues to find support from high demand

Despite the downward trend, gold continues to find support from high demand. Market caution lingers due to concerns surrounding President-elect Donald Trump's warnings about potential tariffs and the economic repercussions of stricter trade policies.

Investors are increasingly wary, with some reallocating their portfolios to gold as a hedge against uncertainties in global growth.

Chicago Fed President Austan Goolsbee and Minneapolis Fed President Neel Kashkari have suggested that rate cuts may be considered if economic conditions require them. However, the market largely anticipates that the Fed will maintain its focus on controlling inflation, further bolstering the dollar's strength.

Key Economic Data to Influence Market Sentiment

Traders are closely monitoring forthcoming U.S. economic data, including revisions to Q3 GDP and the PCE Price Index, to assess the Federal Reserve's direction.

Although the strength of the dollar and rising yields are limiting gold's gains, concerns over potential tariff impacts and overall investor caution are preventing further declines.

Short-Term Forecast

Gold prices are still under pressure around $2,620, with bearish momentum aimed at levels of $2,608 and $2,589. A breakout above $2,629.61 could shift the market sentiment towards a bullish recovery.

Gold Prices Forecast: Technical Analysis

Gold (XAU/USD) is currently trading at $2,620.48, down 0.21%, as it remains just below a crucial pivot level at $2,629.61. Immediate support is located at $2,608.12, with additional support levels at $2,589.60 and $2,566.78 if bearish momentum persists. Resistance is identified at $2,651.77, followed by $2,678.56 and $2,704.69, where sellers may challenge any further gains.

The 50-day EMA at $2,648.12 and the 200-day EMA at $2,655.84 are currently limiting upward movement, reinforcing a bearish outlook in the short term. A break above the pivot level could spark renewed bullish interest, targeting higher price levels.

For now, gold remains susceptible to downward pressure, but traders should be alert for any decisive moves above $2,629.61 that could signal a potential recovery.

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Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.