Gold Price Stalls Momentum as Trump Inauguration Looms
Gold price maintained its bid tone during the last week, surpassing the $2,700 psychological mark as the dollar saw weakness in the last week. However, Trump’s inauguration helped Greenback regain its momentum in the last New York session. Moreover, the cease-fire deal with Hammas also improved the risk sentiment, weighing on the gold prices.
The US dollar experienced its first retreat in the last six weeks. Cooler than expected US CPI figures reignited the speculations about the Fed’s rate cuts in 2025 that weakened the Greenback.
Fed’s Waller left dovish comments highlighting favorable inflation data that could justify an early rate cut until March if the price moderation persists. Markets expect a 50 bps cut in 2025, reflecting a growing prospect for the Fed’s accommodative policies.
US treasury yields remained stable on Friday after a significant decline. The 10-year yields closed at 4.617% recovering from a 13 bps fall earlier in the week. The US CPI data that slowed to 3.2% y/y against the projected 3.3% ignited the yield decline and poured water on the dollar’s bullish momentum.
The focus has now shifted to Trump’s inauguration and potential policy announcements. Major policies include trade tariffs to be imposed on European and Chinese imports. These policies could create inflationary pressure and dominate the Fed’s future stance. Scott Bessent, nominee Treasury Secretary, emphasized the importance of maintaining USD as the world’s reserve currency and also suggested that inflationary pressure could be partially adjusted in the exchange rate.
Minor US economic indicators like building permits and housing starts came in better than expected while equity markets also reflected optimism. However, the uncertainty surrounding Trump’s policies remains high.
Gold’s 4-hour chart shows a whipsaw momentum above the $2,700 level. The price dipped to $2,689 but soon found buying and pushed back above the $2,700 area. Technically, the bias is bullish. However, the corrective downside may occur as the key moving averages have turned flat. Smaller timeframes also poise a risk for the downside.
Find us on
