Gold is currently testing key technical levels and is trading around $2656.16, the 50-day moving average that capped last week’s rallies. If bullish momentum continues and this barrier is broken, gold could move towards the $2663.51-$2693.40 retracement zone. Additionally, $2726.30 marks the next major resistance.
On the downside, initial support is between $2629.13 and $2607.35, which has already stopped the selling pressure earlier in the session. A break below this zone could lead to further losses, increasing the chance of a retest towards $2600.
A closer look at economic data and the Fed’s interest rate path
Gold’s movement this week is closely tied to US economic indicators. Traders are awaiting JOLTS’ jobs report on Tuesday, ADP’s employment numbers on Wednesday and the minutes of the Federal Reserve meeting. Friday’s nonfarm payrolls report is the centerpiece, which is expected to provide clarity on labor market conditions and influence the Fed’s policy stance.
The rising yields, with 10-year Treasury yields hovering around 4.634%, reflect market skepticism about aggressive Fed rate cuts in 2025. Goldman Sachs analysts have upgraded their gold price forecast and pushed their target from $3,000 to the second quarter from 2026 due to fewer expected interest rate cuts.
Inflation risks and Trump’s economic policies
The dollar weakened 1% on reports that President-elect Donald Trump could limit tariffs to key sectors, easing fears of widespread trade restrictions. This news softened inflation expectations, although rates remain a potential inflation driver that could indirectly support gold as a hedge.
Higher inflation, combined with persistent geopolitical risks, continues to provide underlying support for gold, although easing tensions in the Middle East may limit safe-haven buying in the near term.