On Tuesday (December 31), at the beginning of the Asian market, spot gold was fluctuating slightly around $2,606.57 per ounce, continuing the downward trend from the previous trading day. Gold prices fell 0.6% on Monday, briefly losing the $2,600 mark, hitting a low of $2,595.98 per ounce, and finally closing at $2,605.62 per ounce. This price is below the key support level of the 100-day moving average of $2,619 per ounce, indicating that the short-term bearish sentiment on gold is gradually increasing in the market.
Strong Dollar Pressures Gold, Market Awaits New Catalysts
The US dollar index reached a high of 107.96 on Monday, marking a new peak in nearly a week. Though it slightly retreated by the end of the day, it remained strong, closing at 108.03. In 2024, the dollar index has risen approximately 6.6% overall, exerting clear pressure on gold prices. Traders widely believe the current market volatility is primarily influenced by thin trading volumes during the holiday period, alongside potential window-dressing by funds before the year-end.
The market's focus has shifted to the upcoming US economic data releases, including job openings data, the ADP employment report, the Federal Reserve's December meeting minutes, and the non-farm payroll report. These data points will provide clues on the health of the economy and significantly influence gold price movements.
Federal Reserve Policy Outlook Influences Market Expectations
In its December decision, the Federal Reserve lowered its forecast for rate cuts in 2025 from 100 basis points to 50 basis points. Chairman Powell clearly stated that further interest rate adjustments depend on the continued decline in inflation. Major investment banks like Bank of America and Goldman Sachs expect the Federal Reserve to keep rates steady at the January meeting, following a 25-basis point rate cut in December.
As the market digests expectations of fewer rate cuts by the Federal Reserve next year, the dollar continues to strengthen, which significantly pressures gold prices. Meanwhile, the impending inauguration of US President-elect Trump and potential policy shifts, such as deregulation, tax adjustments, and tariff policies, are seen as important variables impacting the market.
Gold Technical Analysis: Focus on 200-Day Moving Average Support
From a technical perspective, spot gold still faces short-term downside risks. The support level to watch is the November 14 low of $2,536.68 per ounce. If this level is breached, gold prices may further test the support at the 200-day moving average of $2,485.55 per ounce. Resistance is concentrated around the 100-day moving average of $2,619 per ounce. Successfully reclaiming this level will weaken short-term bearish signals.
Long-Term Support Factors Remain: Geopolitical and Safe-Haven Demand
Despite short-term pressure on gold prices, most analysts believe that amid geopolitical tensions and the ongoing purchase of gold by major central banks, gold still has long-term support. In 2024, gold prices have already risen about 27% and reached a historical high of $2,790.15 per ounce in October. With the anticipated fiscal deficit and debt issues potentially escalating under the Trump administration, the market expects safe-haven demand for gold to further increase.
Last Trading Day Focus: Manufacturing Data and Position Adjustments
Today is the last trading day of 2024. The market will focus on the performance of China's December official manufacturing PMI data and watch for the potential impact of broker year-end position adjustments on the market. As of 07:52 Beijing time, spot gold was priced at $2,606.41 per ounce, with the short-term trend full of uncertainty. Investors need to pay attention to subsequent data and market dynamics.
