Gold prices fell 1% on Friday, retreating from a five-week high as the U.S. dollar strengthened. Despite the dip, bullion remains up 0.8% for the week, supported by expectations of a Federal Reserve rate cut at next week’s policy meeting.
U.S. gold futures settled at $2,675.80, pressured by the dollar’s strongest weekly performance in a month. Investors are factoring in a slower pace of Fed rate cuts in 2025, while reports of the Bank of Japan holding rates steady further bolstered the greenback.
The dollar index rose 0.037% to 107, marking a 1% weekly gain, as U.S. data showed a cooling labor market and producer price inflation aligned with Fed expectations. Traders assign a 97% probability of a 25-basis-point rate cut on December 18, keeping focus on Chair Powell’s guidance for 2025.
On Thursday, gold touched its highest level since November 6 and has risen over 0.8% for the week. U.S. gold futures settled 1.2% lower at $2,675.80 per ounce.
The U.S. dollar also gained against the yen after reports suggested that the Bank of Japan might hold off on a rate hike at its upcoming policy meeting. The dollar index, which tracks the greenback against six major currencies, rose 0.037% to 107, heading for a weekly gain of nearly 1%—its largest in a month.
Economic data from the U.S. on Thursday showed a gradual cooling in the labor market and producer price inflation aligning with expectations. These developments reinforced market sentiment for a Federal Reserve rate cut at its December 17-18 meeting but hinted at a slower pace of reductions in 2025.
Gold prices have surged this year, driven by easing monetary policies, robust central bank buying, and heightened safe-haven demand. Traders now see a 97% probability of a 25-basis-point rate cut at the upcoming Fed meeting.
Attention will also be focused on Federal Reserve Chair Jerome Powell’s commentary as investors assess U.S. monetary policy for 2025, particularly in the context of President-elect Donald Trump’s proposed tariff plans. Economists warn these tariffs could further fuel inflation.
Central banks often maintain higher interest rates to curb inflation, which raises the opportunity cost of holding non-yielding assets like gold. However, ongoing macroeconomic uncertainties continue to support the metal’s allure as a safe-haven investment.
Technical Outlook gold prices falling down
Gold prices saw an intraday decline of over 1% on Friday, settling at ₹77,136, down from the previous day’s close of ₹77,969. Prices reversed sharply from Thursday’s peak of ₹79,035, retreating towards ₹77,136 and forming a long bearish candlestick.
Adding to the bearish outlook, the RSI (14) and its 9-day SMA have triggered a negative crossover, signaling a potential for continued downside momentum in the near term.
Immediate Support: ₹76,980. A break below this level could open the path to test the next support at ₹76,100–₹75,750.
Resistance Zone: Any rise toward ₹77,800–₹78,000 is likely to face selling pressure this week.
Upside Potential: A decisive break above the key resistance at ₹78,580 could shift the trend, paving the way for further gains toward ₹79,200–₹79,800.
Traders should closely monitor these levels for directional cues in the coming sessions.
Until then, Happy Trading!
Commodity Samachar Securities
We Decode the Language of the Markets
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