- Summary:
- Gold price faces increasing pressure as Trump readies to enter office and war-driven safe haven demand eases.
Gold price extended its decline on Monday as it traded at $2,613 at the spot market at the time of writing after losing 0.3%. The yellow metal is under pressure from a resurgent US dollar, with Goldman Sachs forecasting that the next rate cut by the Federal Reserve will likely come in March 2025.
XAUUSD was rejected at $2,640 in the last two sessions, establishing that mark as a key resistance level in the near-term. However, gold price is likely to face sustained pressure heading into the new year where Donald Trump’s economic policies could disrupt the markets.
Trump’s second stint in office is expected to keep interest rates elevated, thanks to tariffs and deregulation. Meanwhile, the Bank of Japan (BoJ) is expected to raise interest rates in March 2025 after recent data showed that inflation was on sustainably on the growth path. That will also add pressure on gold price.
On the flipside, Trump’s policies could increase safe haven demand for gold, which could drive up prices. Meanwhile, yields on benchmark 10-year US treasury bonds were down by 2.2 basis points at the time of writing, adding near-term support to gold price upside.
However, the Middle East conflict has thawed in recent days and the Russia-Ukraine war could fizzle out with the change of guard at the White House. That, too, could drive gold prices downward.
Gold price prediction
Gold price pivots at $2,620 and the momentum indicators signals control by the sellers. Immediate support is likely to be at $2,608, but a stronger downward momentum will break below that level and could potentially test $2,590.
On the other hand, moving above $2,620 will favour the buyers to take control. In that case, gold price could target $2,627 next. The downside narrative will be invalid if the price breaches that level. Also, the resulting momentum could extend gains to test the next resistance at $2,635.
