Gold Price Recovery Stalls Ahead of December High

Gold Price Outlook: XAU/USD

The recovery in the price of gold seems to have stalled ahead of the December high ($2726) as it no longer carves a series of higher highs and lows.

Gold Price Recovery Stalls Ahead of December High

The price of gold may struggle to retain the advance from the monthly low ($2615) as the 256K rise in US Non-Farm Payrolls (NFP) curbs expectations for lower US interest rates, and speculation surrounding US monetary policy may influence bullion as it serves as an alternative to fiat currencies.

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US Economic Calendar

In turn, the update to the US Consumer Price Index (CPI) may sway the precious metal as the headline reading is expected to increase to 2.9% in December from 2.7% per annum the month prior, while the core rate is seen holding steady at 3.3% during the same period.

Signs of persistent price growth may push the Federal Reserve to pause its rate-cutting cycle amid the ongoing expansion in employment, and the central bank may further adjust its forward guidance as the ‘median participant projects that the appropriate level of the federal funds rate will be 3.9 percent’ at the end of 2025 compared to the 3.4 percent forecast at the September meeting.

With that said, gold may continue to trade within the confines of the November range as it holds below pre-US election prices, but the threat of a policy error by major central banks may keep bullion afloat as it serves as an alternative to fiat currencies.

XAU/USD Price Chart – Daily

Chart Prepared by David Song, Senior Strategist; XAU/USD on TradingView

The recent recovery in the price of gold may unravel as it appears to be reversing ahead of the December high ($2726), with a close below $2630 (78.6% Fibonacci extension) to $2660 (23.6% Fibonacci extension) zone bringing the monthly low ($2615) on the radar.
Next area of interest comes in around $2590 (100% Fibonacci extension), but the price of gold may face range bound conditions should it hold above the December low ($2584).
Need a breach above the monthly high ($2698) to bring the December high ($2726) on the radar, with a break/close above the $2730 (100% Fibonacci extension) opening up the November high ($2762).

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--- Written by David Song, Senior Strategist

Follow on X at @DavidJSong

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