- Gold is down slightly in recent trading, still up 0.40% on the week amid geopolitical tensions.
- Mixed US economic data; Greater housing starts, fewer construction permits minimally impact the Bullion.
- Fed Governor Waller’s dovish comments suggest potential early rate cuts.
The price of gold fell at the end of the North American session, but is set to end the week with gains of over 0.40% as market players await the inauguration of US President-elect Donald Trump. Although XAU/USD is trading at $2,701, down 0.44%, investors continued to buy the gold metal due to political uncertainty.
The precious metal continues to be driven by geopolitics and politics in the United States (US). Although US Treasury yields in the middle of the curve remained unchanged, Bullion buyers failed to push prices higher to book additional gains ahead of the weekend.
The US economic calendar showed housing starts rose by double digits, although building permits contracted in December. Gold barely reacted to the news as most of the data released during the week, led by retail sales released on Thursday, suggests the economy is strong.
The US Dollar Index (DXY), which tracks the performance of the USD against a basket of six peers, rose 0.35% to 109.34.
Other data revealed during the Asian session showed that China’s economy reached a gross domestic product (GDP) growth rate of 5% in 2024, according to the National Bureau of Statistics.
On Thursday, Fed Governor Christopher Waller leaned toward a dovish stance, commenting that the US central bank could reduce borrowing costs sooner and faster if the disinflation process evolves.
Market participants are pricing in roughly equal odds that the Fed will cut rates twice by the end of 2025 and see the first reduction in June.
Fountain: Prime Market Terminal
Next week, the US economic agenda will include the US presidential inauguration, the release of initial jobless claims and preliminary PMI data.
Daily Market Summary: Gold Price Under Pressure Ahead of the Weekend
- Gold fell as real yields held firm on Friday. As measured by the yield on 10-year Treasury Inflation Protected Securities (TIPS), it was virtually unchanged at 2.18%.
- The 10-year US Treasury bond yield was unchanged at 4.618%, a headwind for the gold metal.
- US housing starts increased from 1.294 million to 1.499 million in December, an increase of 15.8% month-over-month.
- Building permits for the same period were down as permits fell from 1.493 million to 1.483 million, a drop of 0.7%.
- The latest inflation data and Waller’s comments from the Fed put pressure on the US dollar as traders had become confident that the Fed would cut rates sooner rather than later. Waller did not rule out a cut at the March meeting as inflation “is getting closer to what our 2% inflation target would be.”
XAU/USD Technical Outlook: Gold Holds Firm Near $2,700
Gold prices fell amid a lack of catalysts ahead of the weekend. However, buyers must keep XAU/USD prices above $2,700, so that they can remain optimistic of pushing the yellow metal towards the December 12 high of $2,726. Once broken, the next stop would be $2,750, followed by the all-time high at $2,790.
On the other hand, the failure of buyers to achieve the aforementioned result could mean that gold could test the January 13 low of $2,656, followed by the confluence of the 50-day and 100-day simple moving averages (SMAs) at $2,639 – $2,642.
Gold FAQs
Gold has played a fundamental role in human history, as it has been widely used as a store of value and medium of exchange. Today, apart from its brilliance and use for jewelry, the precious metal is considered a safe-haven asset, meaning it is considered a good investment in turbulent times. Gold is also considered a hedge against inflation and currency depreciation, since it does not depend on any specific issuer or government.
Central banks are the largest holders of Gold. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and purchase Gold to improve the perception of strength of the economy and currency. High Gold reserves can be a source of confidence for the solvency of a country. Central banks added 1,136 tons of gold worth about $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the largest annual purchase since records exist. Central banks in emerging economies such as China, India and Türkiye are rapidly increasing their gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are the main reserve and safe haven assets. When the Dollar depreciates, the price of Gold tends to rise, allowing investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken the price of Gold, while sell-offs in riskier markets tend to favor the precious metal.
The price of Gold can move due to a wide range of factors. Geopolitical instability or fear of a deep recession can cause the price of Gold to rise rapidly due to its status as a safe haven asset. As a non-yielding asset, the price of Gold tends to rise when interest rates fall, while rising money prices tend to weigh down the yellow metal. Still, most of the moves depend on how the US Dollar (USD) performs, as the asset is traded in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold in check, while a weaker Dollar is likely to push up Gold prices.
Source: Fx Street

I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.