FED's Impact on Gold

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The Federal Reserve has signaled that it will continue with interest rate cuts in 2025, but at a slower pace. It is not expected to make a cut in January, due to persistent inflation and labor market strength. This suggests that the Fed will be more cautious in its next moves, keeping interest rates higher for longer than expected. Gold, traditionally a safe haven in times of economic uncertainty, could be affected by these policies. Prolonged high interest rates could make dollar assets, such as bonds, more attractive to investors, which would decrease demand for gold. However, inflation remains a relevant concern, which keeps gold as an option to protect purchasing power. In addition, the strength of the labor market could continue to put pressure on inflation, which would benefit gold as a safe haven.


Gold Technical Analysis
Gold starts the week with a bullish momentum, trading at $2659. To continue its advance, it needs to overcome resistance at $2666, which could lead it to look for the next resistance at $2685. The checkpoint zone is at $2637, which marks a key support level.
Technical indicators, especially the mid-range crossovers, suggest that gold could face a bearish consolidation. If this scenario is confirmed, the price could pull back towards the checkpoint at $2637, a level to watch closely to assess the strength of the trend.

Short-Term Outlook
In conclusion, even if the Fed maintains a cautious stance, gold remains a valuable asset in the face of inflation and economic uncertainty. In the short term, gold faces resistance at $2666 and could correct towards $2637 if technical indicators suggest a bearish consolidation. However, inflation and economic strength could continue to support gold demand.
Ion Jauregui - ActivTrades Analyst





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