Markets react to tensions and economic announcements
The price of gold (XAU/USD) is showing steady progress, marking a third consecutive day of gains. Supported by a climate of geopolitical uncertainty, the demand for this precious metal stay strong. Investors are closely watching political developments, including the U.S. president-elect’s controversial tariff plans. At the same time, US bond yields are falling slightly, reinforcing the appeal of gold as a safe haven.
Also read: The price of gold multiplied by 10 since the start of the euro, can we hope for a new record in 2025?
Despite this positive dynamic, the continued strength of the American dollardriven by the monetary outlook of the Federal Reserve, limits upward ambitions. Operators are cautious ahead of US employment data expected on Friday, which could influence market directions.
A recovery supported by security flows and mixed economic data
The latest economic indicators reflect a contrasting situation. Employment figures published by ADP indicate a creation of 122,000 jobs in the private sector for December, well below expectations. At the same time, weekly applications for unemployment benefits reached their lowest level in almost a year, demonstrating a certain resilience in the American labor market.
On the other hand, the minutes of the last FOMC meeting show a consensus in favor of a slowdown in rate cuts, adding a damper to hopes of further accommodative measures. This helps keep bond yields high, supporting the dollar while weighing on gold.
Geopolitical tensions amplify uncertainty
On the international level, crises are intensifying. In Eastern Europe, Ukraine continues to face significant losses in the conflict between its armed forces and Russia. In the Middle East, Israeli strikes are increasing amid a surge in violence. These events fuel increased demand for safe haven assets like gold, seen as a shield against instabilities.
Technical analysis: obstacles to overcome to exceed $2,700
From a technical point of view, the price of gold meets resistance around $2,670, a level which could, if crossed, open the way towards $2,700. Daily oscillators are signaling buyer-friendly momentum, although some strategic support points, such as $2,645, remain to watch for a correction.
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A more marked drop below $2,600 could, however, signal a reversal of the trend, bringing prices back towards the levels reached in December around $2,550.
Interest rates, a key factor for gold and the dollar
Gold movements are closely linked to interest rate. Rising rates generally strengthen the dollar, increasing the opportunity cost of holding gold. Conversely, a drop in rates or sustained inflation favors the precious metal, seen as a hedge against monetary depreciation.
The federal funds rate, the main indicator of the Federal Reserve’s monetary policies, is particularly closely monitored. Future decisions on this rate will directly influence the gold and currency markets.
In summary, investors remain attentive to economic and geopolitical developments that shape the price of gold. The next few days, marked by major economic announcements and speeches from Fed members, will be decisive for the future.
