The price of gold slightly decreases during the early part of the European session on Monday.
Gold buyers paused for a moment after their prices quickly went beyond the highest level seen before in the last trading session.
The possibility of the Fed lowering interest rates next year and the flow of safe-haven investments could limit how much XAU/USD drops.
Gold prices (XAU/USD) dropped from a new high close to $4,550 during early trading in Europe on Monday. Traders are taking some profits before the holidays. A stronger US Dollar could also affect gold prices. When the dollar gets stronger, gold becomes more expensive for people who don't use the dollar, which can make buyers less interested and push prices down.
Even though Gold had a small drop recently, it has gone up almost 70% this year, which is its best yearly gain since 1979. The risk of Gold going down might not be too big because people expect the US Federal Reserve to lower interest rates in 2026. Lower rates could make holding Gold more attractive since it doesn’t pay interest. Also, ongoing political and military conflicts around the world might make Gold more valuable as a safe investment.
Financial markets may not be very active before the New Year break. The US report on pending home sales for November is expected to come out later in the day on Monday.
Daily Digest Market Movers: Gold is not performing as well because there isn't enough money flowing through the markets at the end of the year.
US President Donald Trump said he has made "a lot of progress" in discussions with Ukrainian President Volodymyr Zelensky about a potential peace agreement. But he also mentioned there hasn't been much progress on the main issue of territory, and it could take a few weeks to resolve that.
The number of people filing for unemployment benefits in the US for the week ending December 20 dropped to 214,000, which is lower than the 224,000 reported the previous week. This number was better than what analysts had expected, which was 223,000.
Trump said last week that he believes the next Fed leader will keep interest rates low and will never "disagree" with him. These remarks are probably going to make investors and government officials more worried about the Federal Reserve's ability to act independently.
The Federal Reserve has lowered interest rates three times this year, and traders are expecting two more rate cuts next year. Financial markets are betting there's an 18.3% chance the Fed will lower rates again at its next meeting in January, as shown by the CME FedWatch tool.
Gold remains strong, but the RSI being too high shows that there might be a pause soon.
Gold is currently trading lower today. But over a longer period, the positive outlook is still there because the price stays above the important 100-day Exponential Moving Average on the daily chart. Also, the Bollinger Bands are expanding, which suggests that the price could go up more.
Even though the trend is going up, the 14-day Relative Strength Index (RSI) is above 70, which means the price might be too high right now. This could mean that any further increase might slow down a bit before the price starts going up again.
The highest price ever, $4,550, is a key level that could stop the price from going higher. If the price makes a green candlestick and breaks above this level, it might go up to the $4,600 mark, which is a significant psychological level.
On the negative side, the December 23 low of $4,430 is the first support level to watch. If this level is broken, it could lead to a drop to the December 22 low of $4,338, and then to the December 17 low of $4,300.
Gold buyers paused for a moment after their prices quickly went beyond the highest level seen before in the last trading session.
The possibility of the Fed lowering interest rates next year and the flow of safe-haven investments could limit how much XAU/USD drops.
Gold prices (XAU/USD) dropped from a new high close to $4,550 during early trading in Europe on Monday. Traders are taking some profits before the holidays. A stronger US Dollar could also affect gold prices. When the dollar gets stronger, gold becomes more expensive for people who don't use the dollar, which can make buyers less interested and push prices down.
Even though Gold had a small drop recently, it has gone up almost 70% this year, which is its best yearly gain since 1979. The risk of Gold going down might not be too big because people expect the US Federal Reserve to lower interest rates in 2026. Lower rates could make holding Gold more attractive since it doesn’t pay interest. Also, ongoing political and military conflicts around the world might make Gold more valuable as a safe investment.
Financial markets may not be very active before the New Year break. The US report on pending home sales for November is expected to come out later in the day on Monday.
Daily Digest Market Movers: Gold is not performing as well because there isn't enough money flowing through the markets at the end of the year.
US President Donald Trump said he has made "a lot of progress" in discussions with Ukrainian President Volodymyr Zelensky about a potential peace agreement. But he also mentioned there hasn't been much progress on the main issue of territory, and it could take a few weeks to resolve that.
The number of people filing for unemployment benefits in the US for the week ending December 20 dropped to 214,000, which is lower than the 224,000 reported the previous week. This number was better than what analysts had expected, which was 223,000.
Trump said last week that he believes the next Fed leader will keep interest rates low and will never "disagree" with him. These remarks are probably going to make investors and government officials more worried about the Federal Reserve's ability to act independently.
The Federal Reserve has lowered interest rates three times this year, and traders are expecting two more rate cuts next year. Financial markets are betting there's an 18.3% chance the Fed will lower rates again at its next meeting in January, as shown by the CME FedWatch tool.
Gold remains strong, but the RSI being too high shows that there might be a pause soon.
Gold is currently trading lower today. But over a longer period, the positive outlook is still there because the price stays above the important 100-day Exponential Moving Average on the daily chart. Also, the Bollinger Bands are expanding, which suggests that the price could go up more.
Even though the trend is going up, the 14-day Relative Strength Index (RSI) is above 70, which means the price might be too high right now. This could mean that any further increase might slow down a bit before the price starts going up again.
The highest price ever, $4,550, is a key level that could stop the price from going higher. If the price makes a green candlestick and breaks above this level, it might go up to the $4,600 mark, which is a significant psychological level.
On the negative side, the December 23 low of $4,430 is the first support level to watch. If this level is broken, it could lead to a drop to the December 22 low of $4,338, and then to the December 17 low of $4,300.
