(Kitco News) – The Fed’s hawkish stance and fewer 2025 rate cuts are keeping gold prices under pressure, and the yellow metal will face key tests of support during the holiday week, according to analyst James Hyerczyk at FX Empire.
Hyerczyk noted that gold was searching for direction amid the holiday trading lull.
“Gold prices dipped on Monday as thin holiday trading kept momentum in check,” he wrote. “After last week’s sharp decline, gold is attempting to recover but faces resistance between $2607.25 and $2607.35. A breakout above $2629.13 is possible, but traders will need stronger volumes to drive further gains — something unlikely until after the New Year.”
“If gold can push through $2629.13, it may climb toward the 50-day moving average at $2668.75,” he said. “On the flip side, a drop below $2607.35 could send prices back to $2583.91, with the next key support at $2536.85.”
Hyerczyk said that gold’s price action has been restrained following last week’s 25 basis point rate reduction from the Federal Reserve.
“While the cut initially buoyed prices, the Fed’s forecast for just two rate cuts in 2025 — down from the four projected in September — triggered selling, pulling gold to its lowest level since mid-November,” he noted. “With limited economic data this week and traders stepping back for the holidays, gold is expected to stay within a narrow range. Liquidity remains low, curbing volatility and keeping price movements subdued.”
U.S. Treasury yields and the greenback are also maintaining their recent strength during thin market trading.
“Treasury yields edged slightly higher to start the week, with the 10-year yield rising to 4.536% and the 2-year yield ticking up to 4.325%,” Hyerczyk said. “Yields jumped last week following the Fed’s policy update but eased on Friday after softer-than-expected inflation data. The dollar held steady as markets processed the Fed’s outlook for 2025.”
He added that the narrowly averted U.S. government shutdown over the weekend served to calm markets, “but trading volumes are expected to thin further in the lead-up to the Christmas break.”
Turning to the technical picture, Hyerczyk said that gold’s short-term outlook hinges on its ability to successfully maintain the $2607.35 support level. “A slip below this level could accelerate losses to $2583.91 or even $2536.85,” he said. “Conversely, a push above $2629.13 may open the door to $2668.75, but any meaningful rally will likely have to wait until after the holidays.”
Over the longer term, the yellow metal’s prospects remain positive, with the combination of rate cuts, sticky inflation, and ongoing geopolitical risks supporting demand through 2025. “Traders should stay alert for shifts in economic data or political headlines that could reignite interest in gold as a safe-haven asset,” Hyerczyk concluded.
Spot gold has already come close to a test of key support during Monday’s trading session, falling to a low of $2,608.26 per ounce at 11:15 a.m. EST.
It has since staged a modest recovery and last traded $2,612.01 for a loss of 0.44% on the daily chart.
