U.S. Dollar Strength and Federal Reserve Policy Impact Gold Prices
The U.S. dollar, which briefly strengthened to 109.30, gained support from rising Treasury yields. The yield on the 2-year note stands at 4.23%, while the 10-year yield hovers around 4.60%. Market participants remain attentive to Trump’s economic policies, including potential tax reforms and tariff measures, which could influence future Fed decisions.
Recent economic data suggests mixed signals; U.S. retail sales grew by 0.4% in December to $729.2 billion, slightly below expectations, while inflation held steady with the Consumer Price Index (CPI) rising 2.9% year-over-year. Core CPI, excluding food and energy, increased by 3.2%.
Fed policymakers remain cautious, with Chicago Fed President Austan Goolsbee noting a stabilizing job market. Trump’s Treasury Secretary nominee, Scott Bessent, emphasized the need to uphold the U.S. dollar’s role as the global reserve currency to ensure economic stability.
China’s Economic Policies and Global Tensions Influence Gold Outlook
China’s central bank has kept its Loan Prime Rates (LPRs) unchanged, with the one-year rate at 3.10% and the five-year rate at 3.60%. This policy decision underscores Beijing’s focus on economic stability amid global uncertainties.
Meanwhile, geopolitical tensions persist, with ongoing conflicts in Eastern Europe and the Middle East driving safe-haven demand. Russia’s military actions in eastern Ukraine, along with broader market uncertainties, continue to support gold prices.
Analysts expect that unless these tensions ease, gold could remain resilient in the near term.
Source: Gold (XAU) Silver (XAG) Daily Forecast: Buyers Defend Key Support Levels – What’s Next?
