Gold prices eased slightly after reaching a fresh all-time high of $4,643 in the previous session, with XAU/USD hovering close to the $4,600 level on Thursday. The pullback reflects a firmer US Dollar and shifting expectations around US monetary policy, as a series of stronger-than-expected US economic releases reinforced the view that the Federal Reserve is likely to keep interest rates unchanged for the coming months. As a non-yielding asset, gold tends to face headwinds when rate-cut expectations are pushed further out.
From a technical standpoint, gold remains in an overall bullish structure despite the short-term pause. On the daily chart, price action continues to unfold within a developing ascending wedge, a pattern that often signals slowing upside momentum and raises the risk of a corrective move if support breaks decisively. Gold is holding above its rising nine-day Exponential Moving Average, preserving the near-term uptrend, while the 50-day EMA has turned higher and continues to support the broader bullish outlook. Momentum indicators remain constructive, with the 14-day Relative Strength Index near 66, indicating positive momentum without entering overbought territory. A moderation in momentum could see the RSI drift toward neutral, but sustained strength would keep upside pressure intact.
Immediate resistance remains at the recent record high near $4,643, followed by the upper boundary of the wedge around $4,660. A clear break above this area would likely open the door toward the $4,700 level. On the downside, initial support is seen at the nine-day EMA near $4,536, with stronger support aligned with the lower wedge boundary around $4,490.
Fundamentally, easing geopolitical tensions have also weighed modestly on safe-haven demand. US President Donald Trump indicated that reports suggest Iran’s crackdown-related killings have slowed and that large-scale executions are not expected, though he emphasized that the US would continue monitoring the situation closely and did not rule out future military action. At the same time, lingering concerns about the Federal Reserve’s independence have provided underlying support for gold. Fed Chair Jerome Powell criticized the Trump administration’s decision to subpoena him, calling it an attempt to pressure the central bank into easing policy. Trump later said he has no immediate plans to remove Powell, despite an ongoing Justice Department investigation, though uncertainty around the situation remains.
Gold has also been pressured by renewed strength in the US Dollar. The Dollar Index has rebounded toward the 99.10 area after slipping earlier in the week, reducing foreign-currency demand for dollar-denominated commodities. Recent US data has bolstered the greenback, with retail sales jumping 0.6% in November to $735.9 billion, well above expectations, and producer price inflation accelerating more than forecast, with both headline and core PPI rising to 3% year-over-year.
Adding to the cautious outlook for rate cuts, Morgan Stanley pushed back its expectations for Fed easing to June and September, citing resilience in the labour market. Minneapolis Fed President Neel Kashkari echoed this sentiment, noting that economic conditions remain solid and that tariff-related inflation pressures appear more limited than initially feared, even though inflation is still above target. The Fed’s Beige Book further supported this view, reporting that economic activity expanded at a slight to modest pace across most regions, marking an improvement compared with previous cycles.
Inflation data offered mixed signals. Core CPI rose 0.2% month-on-month in December, below expectations, while annual core inflation held at 2.6%, matching a four-year low. Headline CPI increased 0.3% on the month, in line with forecasts, keeping the annual rate steady at 2.7%. While these figures suggest inflation is easing gradually, they have not been weak enough to accelerate expectations for near-term rate cuts.
