Gold prices retreated below $2,650 on Friday, capping weekly gains. This coincided with a recovery in market risk appetite following positive US ISM data and reassuring comments from Fed official Barkin.
XAU/USD declined on Friday, with gold prices falling approximately two-thirds of a percent and dropping below $2,650 per ounce as market sentiment showed signs of recovery from the earlier risk-off mood of the week. The global markets had a shaky start to the first week of trading in 2025, with investors seeking clarity and stability as they approached the new year.
Federal Reserve Bank of Richmond President Tom Barkin addressed a bankers’ association in Maryland on Friday. He pointed out that the Federal Reserve had reduced interest rates by a full percentage point in 2024, bringing the federal funds rate to a range of 4.25%-4.5%. Barkin also noted that the U.S. unemployment rate remained at historically low levels, while inflation appeared to be gradually returning to the Fed’s 2% annual target. Additionally, Barkin reportedly downplayed concerns over potential economic disruptions stemming from President-elect Donald Trump’s proposed tariff policies, set to take effect on his first day in office. Barkin remarked that markets should not be overly concerned about the suggested 10%-20% tariff on all imported goods into the U.S., explaining that the pass-through effect of tariffs on prices was complex, depending on factors such as business supply chains and consumer price elasticity.
Looking ahead, American markets and institutions will observe Thursday as a day of mourning for former President Jimmy Carter, who passed away on December 29th at the age of 100. The week will conclude with the release of the first U.S. Nonfarm Payrolls (NFP) report for 2025 on Friday.
Technical Outlook on the Gold Market
Despite the Gold market closing below the critical $2,650 price level today, the peak of price action, as observed on the daily chart, has been steadily declining since October, when it reached a high of nearly $2,800. While a close below $2,650 might suggest a bearish shift, the key support level appears largely unchanged. This could indicate strong buying interest around the $2,600 level. However, persistent downward pressure may eventually force a break below this support.
The current market dynamics, with the price action moving in tandem with the 20-day moving average and the RSI line moving along the indicator’s midpoint, suggest a consolidation phase is underway. This period of consolidation could be a precursor to a significant price move in either direction.
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