A gold market driven by global uncertainty
The price ofor (XAU/USD) continues to rise for the fourth day in a row, reaching a four-week high around 2 678 $ in European session this Friday. This movement is stimulated by persistent geopolitical tensions, notably linked to the prolonged conflict between Russia and Ukraine, tensions in the Middle East and fears of a global trade war. These factors reinforce the appeal of the precious metal as a safe haven.
Also read: Unpredictable movements of the dollar could disrupt your investments in gold
Inflation, expected to rise as a result of the Trump administration’s expansionary policies, also consolidates gold’s status as a hedge against rising prices.
A mixed context for investors
Although the trend is bullish, gold’s gains remain limited by the strength of the American dollar and high bond yields in the United States, supported by the more restrictive approach of the Federal Reserve. Investors are also cautiously watching the imminent release of key US employment data (NFP report), which could influence market developments.
Despite these challenges, current fundamentals offer further upside potential for the gold price, which is heading for a second consecutive week of gains.
Expectations around rates and the NFP report
The Fed recently adopted a cautious stance by announcing only two rate cuts planned for 2025, despite still high inflation. Several officials, including Susan Collins and Patrick Harker, have stressed the importance of solid economic data before considering further adjustments.
For gold, traders expect a slight increase in job creation with an addition of 160,000 positions in December, while the unemployment rate is expected to remain stable at 4,2 %. These figures will be decisive in evaluating the Fed’s future policies and their impacts on financial markets.
A bullish technical outlook
On a technical level, the recent crossing of the horizontal resistance of 2 665 $ constitutes an encouraging signal for bullish investors. Trend indicators on the daily chart show renewed positive momentum, suggesting a possible progression towards the 2 700 $a major psychological threshold.
Any short-term correction should find solid support around the 2 655 $or even towards the key levels of 2 635 $ or 2 600 $supported by the 100-day exponential moving average and an ascending trendline.
Understanding the Fed’s Impact on the Gold Market
The Fed’s tools and their influence on the dollar
The Federal Reserve plays a central role in the management of monetary policy in the United States. By adjusting interest rates, it affects the strength of the dollar. Raising rates generally strengthens the dollar, which can dampen the attractiveness of gold, which does not generate returns.
What is Quantitative Easing (QE)?
The QE involves injecting liquidity into the economy by purchasing high quality bonds. This measure, often used in times of crisis, generally weakens the dollar, thereby increasing the attractiveness of gold.
Et le Quantitative Tightening (QT) ?
Conversely, the QTwhich reduces the Fed’s balance sheet, supports the value of the dollar. This policy, by restricting available liquidity, has an inverse effect on the price of precious metals.
The evolution of the gold price will therefore closely depend on the decisions of the Fed and geopolitical uncertainties. Investors will carefully examine economic data to adjust their strategies.
