Gold prices saw modest gains during the North American session, rising 0.34% to $2,659 as market sentiment was influenced by the U.S. Federal Reserve’s latest meeting minutes and mixed economic data. At the heart of the rally was the Fed’s tone in the minutes of its December meeting, which suggested a neutral to slightly hawkish stance. The Fed indicated that it “would be appropriate to slow the pace of easing,” signaling a cautious approach to future rate cuts.
During the December meeting, the Fed lowered borrowing costs by 25 basis points, but some members argued that rates should remain unchanged, citing concerns over persistently high inflation. Following the release of the meeting minutes, gold prices briefly touched $2,658 before retracting slightly. As of the latest update, gold is trading at $2,659, up 0.34% on the day.
The U.S. Dollar Index (DXY), which tracks the performance of the U.S. dollar against a basket of six major currencies, posted a modest gain of 0.33%, reaching 109.04. Meanwhile, the U.S. 10-year Treasury yield, which had reached 4.73%, retraced slightly to 4.699%, still up by three basis points.
Despite mixed U.S. job market reports, bullion buyers showed resilience. The latest data from the U.S. Department of Labor revealed a drop in initial jobless claims to 201,000 for the week ending January 3, well below the expected 218,000. On the other hand, private sector hiring, as reported by ADP, came in below expectations, with only 122,000 jobs added in December, versus a forecasted 140,000.
Market participants were also focused on comments from Fed Governor Christopher Waller, who downplayed the potential for tariffs to cause persistent inflation. Waller also reiterated his support for further rate cuts, which he emphasized would depend on future data.
In the coming days, traders will be closely watching key economic releases, including Friday’s U.S. Nonfarm Payrolls report and the University of Michigan Consumer Sentiment data. Stronger-than-expected figures could lead to further U.S. dollar strength and potentially push gold prices lower.
Bullish Sentiment on Gold as China’s Central Bank Boosts Reserves
Gold prices were also buoyed by news that China’s central bank, the People’s Bank of China (PBoC), had increased its gold reserves for the second consecutive month. The PBoC added 300,000 ounces to its holdings, bringing its total reserves to 73.3 million ounces. This move is seen as a sign of continued demand for bullion, which may support gold prices in the near term.
Market Outlook: Technical Levels and Future Prospects
Technically, gold prices remain in a consolidation phase but are showing slight bullish momentum. Gold has reclaimed the 50-day Simple Moving Average (SMA) at $2,648, and a break above the $2,660 level could pave the way for a challenge of the $2,700 mark. The next key resistance is the December 12 peak of $2,726, with a potential target of the record high at $2,790.
On the downside, should prices fall below the 100-day SMA at $2,628, the next support level to watch is around $2,500. A further decline could push gold toward the 200-day SMA at $2,498.
As market participants digest mixed U.S. data and monitor ongoing global developments, the outlook for gold remains closely tied to future actions from the Federal Reserve and external factors like China’s gold accumulation.
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