Underlying Demand Remains but Correction Risk Grows

Since natural gas continues to retain support around the prior resistance level, which reflects underlying demand, it remains in a position to potentially continue the rising trend before a deeper pullback. However, there is one more trading day to the week and the current weekly candlestick pattern is showing a bearish shooting star. This is bearish if triggered to the downside. But since the week is not yet complete another day is needed to see if the bearish pattern remains. Today’s low at 3.54 is currently the low for the week.

No Surprise if there is a Deeper Pullback

A new high for the rising trend was established at this week’s high of 4.20. It was quickly met with stronger resistance, which led to weak close on the new high day, as sellers moved to take back control. They remained in control on Tuesday as seen by the weak close. Today is the second day showing a lower daily high and lower low.

If natural gas sees further weakness, there are several price areas to watch for potential support. The 20-Day MA at 3.46 is next in line on the downside. It can be watched along with the rising internal trendline, along with the 78.6% retracement and most recent swing low at 3.28.

Bearish Reaction Following 4.20 Trend High

Given the bearish reaction following the 4.20 trend high it wouldn’t be surprising to see more of a pullback and/or consolidation before natural gas is ready to proceed higher, if it is to do so. And given the recent long-term bullish signal as noted above, triangle breakout and long-term trend continuation signals, once a correction is complete higher target remain a possibility of being reached. However, a sustained drop below the 3.29 swing low would put the bullish scenario at risk in the near-term.

For a look at all of today’s economic events, check out our economic calendar.

XAU/USD Current price: $2,653.70

• Market players started the new year, dropping high-yielding assets amid persistent uncertainty.
• Central banks’ hawkishness and political uncertainty undermine the market’s mood.
• XAU/USD is reaching overbought conditions in the near term, but buyers are unlikely to give up.

Spot Gold trades around $2,650 a troy ounce as market players slowly return to their desks in the New Year holiday aftermath. Investors started the year dropping high-yielding assets, expressing their concerns about what the new year may bring.

Speculation that central banks may keep slowing the pace of interest rate cuts amid stubborn inflation are among the main themes. Geopolitical tensions are also at the top of the list after Ukraine interrupted the flow of Russian gas to several European countries after a former agreement ended on New Year’s Day, with Ukraine refusing to renew it.

Meanwhile, a risk-averse environment dominates the scenes. United States (US) indexes started the day with a positive tone but quickly dipped in the red, sending investors into safe-haven Gold.

XAU/USD short-term technical outlook

XAU/USD peaked at $2,655.68 and holds nearby in the mid-American session. From a technical point of view, the daily chart shows that the positive momentum is not enough to confirm additional gains, yet also that bulls dominate the bright metal. XAU/USD currently trades above all its moving averages, recovering above a flat 20 Simple Moving Average (SMA) after finding buyers around a bullish 100 SMA. Technical indicators, in the meantime, have pared their slides and turned marginally higher, albeit with uneven strength and still far from reflecting strong buying interest.

In the near term, and according to the 4-hour chart, however, XAU/USD is firmly bullish. The Momentum indicator heads north almost vertically well above its 100 line, while the Relative Strength Index (RSI) indicator advances around 70. Finally, the pair has moved above all its moving averages, although they lack directional strength. Gold needs to settle above $2,664.27, December 16 high, to convince speculative interest it could re-test record highs.

Support levels:  2,639.15 2,621.60 2,607.30

Resistance levels: 2,664.30 2,678.85 2,691.60

• Gold price gains to near $2,650 as investors expect heightened global uncertainty under Trump’s administration.
• US Trump is expected to raise import tariffs and lower taxes after joining the White House.
• The US Dollar refreshes two-year higher on lower Initial Jobless Claims in the week ending Dec 27.

Gold price (XAU/USD) extends intraday gains to near $2,650 in the opening North American session on Thursday after the New Year holiday. The precious metal strengthens as its safe-haven appeal as improved, with investors focusing on President-elect Donald Trump taking administration on January 20.

Expected incoming policies from Trump, such as higher import tariffs and lower taxes, will be beneficiaries of the Gold. Higher import tariffs would lead to a potential global trade war and lower taxes will boost inflationary pressures in the United States (US). Gold tends to perform better amid economic uncertainty as a safe-haven bet and higher price pressures, given that investors use the precious metal as a hedge against inflation.

10-year US Treasury yields decline to near 4.54% at the start of the year as the rally stalls. Generally, lower yields on interest-bearing assets result in lower opportunity costs for non-yielding assets, such as Gold, and make them an attractive bet.

Meanwhile, the US Dollar (USD) also gains sharply as investors expect high inflation under Trump’s administration will force the Federal reserve (Fed) to adopt a moderate policy-easing approach. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, posts a fresh two-year high at 108.90.

On the economic front, fewer US Initial Jobless Claims for the week ending December 27 have also strengthened the US Dollar. The Department of Labour reported that individuals claiming jobless benefits for the first time were 211K, lower than estimates of 222K and the former release of 220K.

Gold technical analysis

Gold price trades in a Symmetrical Triangle chart formation on a daily timeframe, which exhibits a sharp volatility contraction. The 20-day Exponential Moving Average (EMA) near $2,630 broadly overlaps Gold’s price, suggesting a sideways trend.

The Relative Strength Index (RSI) oscillates in the 40.00-60.00 range, indicating indecisiveness among market participants.

Looking up, the Gold price would strengthen after a decisive break above the December high of $2,726.00. On the contrary, bears would strengthen if the asset breaks below the November low around $2,537.00.

Gold daily chart

• Gold price extends the rebound from the $2,600 area, setting off 2025 on Thursday.        
• The US Dollar stands tall amid a cautious risk tone and sluggish US Treasury bond yields.
• Gold price looks to $2,650 on a firm break above the 21-day SMA as RSI prods the 50 level.

Gold price is trading on the front foot, kicking off 2025 on Thursday. Gold buyers appear defiant amidst a broad-based US Dollar (USD) strength, targeting $2,650 on an extended rebound from the $2,600 key level.

Gold price sees a positive 2025 start

The USD benefits from a risk-averse market environment as investors remain wary of the upcoming policies from US President-elect Donald Trump and the US Federal Reserve’s (Fed) next policy action. The Fed leaned in hawkish at the December policy meeting, lifting bets for a pause in its interest-rate-cutting cycle this month.

Despite a strong Greenback, a pause in the US Treasury bond yield recovery seems to be aiding the Gold price upside, also as markets scurry for safety in the traditional safe-haven asset due to looming China’s economic concerns and geopolitical risks, mainly in the Middle East.

The expansion in China’s factory activity slowed in December, Caixin PMI showed Thursday. China’s Caixin Manufacturing PMI unexpectedly declined to 50.5 in December after November’s 51.5, missing the expected 51.7 figure.

Further, Gold price draws support from increased expectations of more proactive Chinese policies to promote growth in 2025. China is the world’s biggest Gold consumer.

Risk trends and the US Dollar price action will continue to drive the Gold price direction, with the moves likely to be exaggerated amid holiday-thinned markets. However, the return of the US traders after the New Year holiday break could affirm the US Dollar uptrend, capping the Gold price upbeat momentum.

The weekly US Jobless Claims data could infuse some volatility into markets as traders gear up for another eventful year.

Gold price technical analysis: Daily chart

The daily chart shows that Gold price is challenging the 21-day Simple Moving Average (SMA) of $2,635 on the road to recovery.

The 14-day Relative Strength Index (RSI) prods the 50 level, failing to boost Gold price further.

Acceptance above the 21-day barrier could call for a test of the $2,650 psychological level and the 50-day SMA at $2,655.

The next relevant upside target aligns at the $2,700 round level.

On the flip side, the immediate support is at the previous resistance of 100-day SMA at $2,624.

A daily candlestick close below the latter will negate the recovery momentum, fuelling a fresh downtrend toward the weekly low of $2,596.

Further down, the December 19 low at $2,583 and the November 15 low at $2,555 could be threatened.  

• Gold price holds positive ground to near $2,625 in Thursday’s early Asian session. 
• Geopolitical risks, central bank buying, and safe-haven flows might boost the Gold price. 
• The expectation of a slower pace of the Fed rate cut might cap the upside for the yellow metal. 

Gold price (XAU/USD) trades with mild gains to around $2,625 during the early Asian session on Thursday. The uncertainties around Donald Trump’s tariff policies, geopolitical risks, and central bank buying support the yellow metal. Nonetheless, the cautious stance of the US Federal Reserve (Fed) might cap the Gold’s upside. 

Traders awaited fresh catalysts that could influence the Fed’s interest rate outlook this year. In December, Fed Chair Jerome Powell signaled a cautious stance on further rate cuts after delivering a 25 basis points (bps) reduction. This, in turn, could provide some support to the Greenback and undermine the USD-denominated commodity price. 

The release of the US weekly Initial Jobless Claims on Thursday might offer some hints about the US labor market condition, On Friday, the US S&P Global Manufacturing PMI for December will be in the spotlight. 

On the other hand, the uncertainties surrounding policies from incoming President Donald Trump could lift the precious metal. Additionally, geopolitical tensions in the Middle East and the ongoing Russia-Ukraine conflict are expected to remain high this year, which could boost the safe-haven flows, benefiting the Gold price. 

An increase in global central banks gold demand might contribute to the precious metal metal’s upside. According to the World Gold Council survey, major central banks are likely to purchase more Gold in the next 12 months. This should further bolster demand for the yellow metal.