Gold prices decreased by 0.19% as the US Dollar regained strength. The market is evaluating the Federal Reserve’s outlook after it held interest rates steady and revised growth forecasts down.
The Fed anticipates two rate cuts in 2025, while inflation and unemployment expectations have increased. In the Middle East, ongoing Israeli airstrikes, which have resulted in at least 91 Palestinian deaths, have not positively impacted gold.
Market Reactions To Fed Outlook
Initial Jobless Claims slightly rose to 223,000 but remained below forecasts. The Philadelphia Fed Manufacturing Index dropped to 12.5, indicating slower manufacturing activity. Gold’s first support remains at $3,000, and it must surpass $3,050 to reach $3,100.
The decline in gold prices aligns with the strengthening US dollar, which typically exerts downward pressure on commodities priced in it. Markets are now digesting the Federal Reserve’s decision to maintain interest rates while adjusting economic forecasts. The downward revision of GDP growth projections and the anticipation of two rate cuts in 2025 indicate shifting expectations on monetary policy. Inflation and unemployment estimates have moved higher, creating a more complex macroeconomic backdrop.
At the same time, geopolitical tensions in the Middle East persist, yet they have not provided the expected boost to gold prices. Despite ongoing Israeli airstrikes and associated casualties, there has been no evident shift in demand for the metal as a safe-haven asset. This suggests markets are focusing more on economic and currency dynamics than geopolitical stress.
In the labour market, initial jobless claims did rise, albeit slightly, reaching 223,000. However, this figure still fell below expectations, signalling continued resilience. Meanwhile, the Philadelphia Fed Manufacturing Index’s decline to 12.5 points to a slowdown in factory activity, reinforcing the idea that manufacturing is facing headwinds.
Key Support And Resistance Levels
For those closely monitoring price movements, the $3,000 mark remains the key near-term support level. If selling pressure persists and gold falls below this threshold, downward momentum could increase. Conversely, to establish renewed upside potential, prices would need to clear $3,050 and build momentum towards $3,100.
This collective information will keep derivative traders on their toes. The immediate focus will be on the dollar’s direction, any new commentary from the Federal Reserve, and incoming economic data to assess whether interest rate expectations continue to shift. Additionally, the reaction—or lack thereof—to geopolitical events suggests that broader economic signals are taking precedence in driving sentiment.
