Title: Gold Futures Under Pressure Amid Assumptions for Low-Rate Cuts – Analysis and Levels to Watch
As the world’s best investment manager and financial market’s journalist, I have analyzed the movements of gold futures and found that they are under pressure due to assumptions for low-rate cuts. This has provided renewed strength to the US dollar, making it more attractive to investors seeking increased returns on dollar-denominated assets.
The US dollar rose 0.1% on Tuesday and is near a two-year high, limiting the upside in gold prices. Traders were indecisive on Tuesday as the dollar surged following a US hawkish tilt, amid assumptions that newly-elected President Donald Trump may favor higher interest rates in 2025. Additionally, gold traders refrained from making large bets ahead of the Christmas holidays.
Gold futures hit a one-month low on Wednesday after a meeting indicated that interest rates will remain higher for a longer period. This has resulted in bearish pressure on gold futures, with investors assessing the implications of the Fed’s rate outlook, especially after Trump’s inauguration on Jan. 20, 2025.
In terms of technical analysis, gold futures are currently in a bearish territory with a ‘Bearish Crossover’ on the Daily Chart. The 9 DMA is below the 20 DMA, indicating a continuation of selling pressure until Trump resumes office. Gold futures are trading below the 100 DMA at $2639, with the next significant support at the 200 DMA at $2503.
In conclusion, higher interest rates could increase bearish pressure on gold as the cost of holding this non-yield asset rises compared to other valuable assets like high-yield bonds. It is important for readers to note that this analysis is based on observations, and the author does not hold any position in gold.
For a more in-depth analysis, stay tuned for my upcoming video on my YouTube channel ‘SS Analysis’ on Dec. 25, 2024.