A safe haven under pressure
The price of gold (XAU/USD) remains close to 2 600 dollarssupported by security flows as the US economy heads towards a possible government shutdown. This scenario, combined with ongoing geopolitical risks and trade concerns, is fueling interest in the precious metal. Despite this, significant gains remain limited, held back by tight monetary policy from the US Federal Reserve.
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A Fed determined to slow down rate cuts
The Fed’s signal to gradually cut rates in 2025 is keeping US Treasury yields high. This context reinforces the value of American dollarthus limiting the attractiveness of gold for investors. The imminent publication of the consumer price index (PCE), a key indicator of inflation, could guide future trends.
Technical resistance and a lack of bullish conviction
The gold market is still feeling the effects of the recent break below the 100-day simple moving average, reinforcing a bearish bias. Technical indicators suggest that bulls will need to overcome immediate resistance around the 2 626 dollars to hope for a rebound towards the zone of 2 652-2 655 dollars. Conversely, support for 2 583 dollars could prevent further declines, although a break below this threshold could send the price plunging towards 2 500 dollars or even lower.
The Impacts of Interest Rates on Gold and Currencies
Interest rates and currency values
High interest rates generally strengthen a national currency, making it attractive to global investors. This particularly applies to American dollarthe rise of which often penalizes the price of gold.
The opportunity cost dilemma
Rising interest rates increase the opportunity cost of holding gold, a non-yielding asset. Investors then prefer investments offering attractive returns, such as bonds or bank deposits.
FAQ: Understanding the mechanics behind interest rates and gold
What are interest rates?
Interest rates represent the cost of borrowing or the remuneration of a deposit. They are influenced by central banks, which adjust these rates to stabilize inflation, generally targeted around 2 %. Lower inflation can lead to rate cuts, while higher inflation causes banks to raise rates.
How do rates impact the price of gold?
When rates rise, investors favor profitable assets to the detriment of gold, which puts downward pressure on the price of the latter.
What is the Fed Funds Rate?
This rate, determined by the Fed, governs short-term interbank loans in the United States. It serves as a benchmark for financial markets and directly influences future monetary policies.
This delicate balance between economic tensions, monetary decisions and global uncertainties will continue to shape the evolution of the gold price in the months to come.
