Gold prices faced a modest decline on Friday, with XAU/USD slipping approximately two-thirds of a percent, falling back below the $2,650 per ounce mark. The dip comes as market sentiment begins to stabilize, following a turbulent start to the global trading landscape in the first week of 2025. Investors remain cautious but are searching for signals to solidify their strategies as the new year unfolds.
Federal Reserve Insights and Economic Developments
Federal Reserve Bank of Richmond President Tom Barkin delivered remarks at a bankers’ association meeting in Maryland, shedding light on key economic developments. Barkin emphasized that the Federal Reserve reduced interest rates by a full percentage point in 2024, bringing the federal funds rate to the 4.25%-4.5% range. He also noted that the U.S. unemployment rate remains at historically low levels, while inflation continues to move closer to the Fed’s 2% annual target.
Barkin addressed concerns regarding potential economic repercussions from incoming President Donald Trump’s proposed sweeping tariff policies. The newly proposed tariffs, which aim to impose a 10%-20% fee on all imported goods, have raised fears of simultaneous trade tensions with the U.S.’ closest allies and trading partners. However, Barkin downplayed these worries, stating that the impact of tariffs on prices depends on multiple variables, including business supply chains and consumer price elasticity. He urged markets to remain cautious but not overly alarmed by the proposed measures.
Upcoming Economic Events
The upcoming week will feature notable market disruptions and key economic data releases. On Thursday, American markets and institutions will close in observance of the passing of former President Jimmy Carter, who died on December 29th at the age of 100. This will be followed on Friday by the release of the first U.S. Nonfarm Payrolls (NFP) report for 2025, which is expected to provide further clarity on labor market trends.
Gold Price Technical Analysis
Gold prices have been trapped in a cyclical range since the final quarter of 2024, with XAU/USD bids oscillating around the $2,650 level. This choppy price action is underscored by the 50-day Exponential Moving Average (EMA), which has been trending sideways since November, effectively acting as a barrier for price movements.
Bullish attempts to push XAU/USD above the $2,720 resistance level have repeatedly faltered, while selling pressure has been reinforced by a key technical support level at $2,600. This dynamic highlights the ongoing tug-of-war between buyers and sellers, leaving gold prices constrained within a narrow range.
Outlook
As investors digest the latest economic developments and prepare for next week’s key events, gold prices are likely to remain sensitive to shifts in market sentiment and macroeconomic indicators. The interplay between technical resistance and support levels will continue to shape XAU/USD’s trajectory in the near term.
