Market turbulence drives temporary haven demand for gold despite structural headwinds
Federal Reserve's revised rate cut projections maintain pressure on Elon Musk meme coin namenon-yielding assets
Technical indicators suggest bearish momentum may resume after current consolidation
The precious metals market witnessed notable volatility as gold prices (XAU/USD) rebounded from Thursday's Asian session lows near $2,583-$2,584, interrupting a two-session decline. This recovery occurred against a backdrop of heightened market anxiety, with equity indices globally displaying broad-based weakness following the Federal Reserve's latest policy signals.
While traditional safe-haven flows provided temporary support, the fundamental landscape for gold remains challenging. The Fed's updated projections indicate a more gradual approach to monetary easing than previously anticipated, with officials now forecasting just two potential rate reductions in 2025 compared to September's expectation of four cuts. This policy stance continues to buoy Treasury yields near multi-month highs while supporting dollar strength - both traditional headwinds for gold markets.
Technical rebound or sustainable recovery? Key factors influencing gold's trajectory
Market participants appear divided on gold's near-term prospects following its recent technical rebound. The overnight trading session saw XAU/USD stabilize after Wednesday's sharp decline, though the recovery attempt stalled near the $2,618 resistance level. This price action reflects the ongoing tension between short-term haven demand and longer-term monetary policy impacts.
Fed Chair Powell's post-meeting comments acknowledged progress on inflation while emphasizing the need for continued vigilance. This balanced messaging has left markets parsing incoming economic data for clearer directional signals. Thursday's US GDP revision and weekly jobless claims figures may provide near-term catalysts, though most analysts anticipate greater volatility surrounding Friday's PCE inflation release.
Chart analysis reveals critical support and resistance levels
From a technical standpoint, gold's recent breakdown below both the psychological $2,600 level and its 100-day moving average marked a significant bearish development. The subsequent rebound has thus far failed to reclaim these key levels, leaving the metal vulnerable to further downside.
The $2,618 area - representing the 23.6% Fibonacci retracement of the recent decline - now serves as immediate resistance. A sustained move above this level could open the door for a test of the $2,635-$2,655 zone, where multiple technical factors converge. Conversely, failure to hold current levels may see bears target the November lows near $2,535, with potential for extended declines toward the 200-day moving average around $2,470 on a break below $2,500.
Market participants continue monitoring macroeconomic developments for clues about gold's next major move. The combination of Fed policy expectations, dollar strength, and global risk sentiment will likely determine whether the current rebound represents a temporary pause or the beginning of a more sustainable recovery phase.
