Gold market comment

18 Aralık 2024

Today’s market analysis on behalf of Ahmad Assiri Research Strategist at Pepperstone

Gold price is holding steady with minimal volatility in today’s early session, as market participants await the Fed’s final meeting of the year. A 25-basis-point cut fully priced in, leaving the market’s focus squarely on the Fed’s updated dot plots and projections for 2025. The outlook for next year could have implications for the yellow metal, especially given the evolving narrative around fiscal inflationary pressures.

The broader narrative for 2025 is exactly straightforward. With fiscal policies likely to remain expansionary and inflationary pressures a persistent concern, gold’s role as a hedge against long-term price instability becomes more prominent. A potential shift in focus from monetary to fiscal risks could reignite demand for the metal, especially if markets grow wary of the implications of higher government spending and tariffs in a moderately inflationary environment.

Technically, gold continues to consolidate within a well-defined range. The $2,700-$2,720 resistance zone remains a key hurdle for bullish momentum, while $2,600 serves as a robust support level where buying interest typically reemerges. The $2,620-$2,660 range, which was tested repeatedly during a 10-day consolidation earlier this month, offers an anchor for current price action.

Gold’s path forward will hinge on the Fed’s tone regarding its 2025 outlook. If the Fed emphasises a gradual and cautious rate-cutting trajectory, gold may remain range-bound in the short term. However, concerns over fiscal inflationary pressures could ultimately tilt sentiment in favor of the metal, driving it toward a retest of the upper range. For now, gold’s resilience underscores its enduring appeal as a hedge against uncertainty in current macroeconomic environment.

 

Zaid Barem / YMM