Gold (XAU/USD) is losing ground after hitting a new record high of $4,643 in the previous session, and is trading at around $4,600 per ounce on Thursday. Non-interest bearing gold fell, as stronger-than-expected US Producer Price Index (PPI) and retail sales, coupled with a fall in the unemployment rate last week, strengthened the US Federal Reserve’s (Fed) case for keeping interest rates unchanged for the coming months.
Safe-haven gold prices are also weakening, partly reflecting easing geopolitical concerns. US President Donald Trump said that reports indicate that killings linked to the crackdown in Iran are subsiding and that there are no plans for large-scale executions, but he did not rule out possible US military action, indicating that Washington will continue to monitor developments, according to Reuters.
Demand for safe-haven precious metals, including gold, may rise amid renewed concerns about the independence of the Federal Reserve. Federal Reserve Chairman Jerome Powell criticized the Trump administration’s decision to recall him, saying it amounted to intimidating the Fed into offering easier monetary policy. Trump said on Wednesday that he had no plans to fire Powell despite the Justice Department’s criminal investigation into the Fed chief, but that it was “too early” to say what he would ultimately do.
Daily summary Market drivers: Gold declines as the US dollar rises
- The US Dollar Index (DXY), which measures the value of the US dollar against six major currencies, is gaining ground after recording modest losses in the previous session. The DXY is trading around 99.10 at the time of writing, reducing foreign exchange demand for dollar-denominated gold.
- The U.S. Census Bureau reported Wednesday that retail sales rose more than expected to $735.9 billion in November, up 0.6%, after a 0.1% contraction in October and beating market expectations for a 0.4% increase. Meanwhile, the Producer Price Index (PPI) came in hot in November, with key and core metrics hitting 3% year-on-year.
- Morgan Stanley analysts pushed back their interest rate cut expectations to June and September from January and April after Friday’s jobs report.
- The overall economy appears quite resilient, and it has seen less tariffs pass through than expected, Minneapolis Fed President Neel Kashkari said at a Midwest Economic Outlook Forum hosted online by the Wisconsin Bankers Association on Wednesday. Kashkari added that inflation is still very high but is moving in the right direction.
- The Federal Reserve’s Big Book noted that US economic activity has rebounded at a “slight to modest pace” in most parts of the country since mid-November. “This represents an improvement over the last three reporting cycles, where the majority of Fed regions reported little change.”
- The US core CPI, excluding food and energy, rose 0.2% in December, below market expectations, while annual core inflation held steady at 2.6%, equivalent to a four-year low. The data provided a clearer signal of a decline in inflation after previous releases were skewed by the effects of the lockdown. Meanwhile, the CPI rose 0.3% month-on-month in December 2025, in line with market expectations and repeating the rise seen in September. The annual inflation rate remains at an increase of 2.7%, as expected.
- The US-based human rights organization Harrana reported on Wednesday that the death toll in Iranian protests had reached 2,571. US President Donald Trump urged Iranians to continue protesting, vowing that help was on the way, according to Reuters.
- President Trump said Monday he would impose 25% tariffs on goods coming from any country that does business with Iran, increasing pressure on Tehran amid widespread internal protests. He added that the measure would take effect immediately, without providing further details. Trump warned on Sunday that action may be necessary before any meeting, though he said the Iranian leadership had reached out seeking “negotiation” after his military threats.
- US nonfarm payrolls rose by 50,000 in December, lower than the 56,000 in November (revised from 64,000) and weaker than market expectations of 60,000. However, the unemployment rate fell to 4.4% in December from 4.6% in November, while average hourly earnings rose to 3.8% year-on-year in December from 3.6% in the previous reading.
Gold bulls remain intact as they hold above the nine-day EMA
Gold (XAU/USD) is trading around $4,600 on Thursday. Technical analysis on the daily chart shows that the XAU/USD pair is still within a rising wedge pattern. This formation indicates weak upward momentum and warns of a possible bearish reversal if the price breaks below the lower trend line with strong trading volume.
Gold price is holding above the bullish nine-day exponential moving average (EMA), keeping the near-term uptrend intact. The 50-day EMA is turning higher and supporting the broader bullish bias. The 14-day Relative Strength Index (RSI) at 66.05 is positive without overbought levels. The RSI could pull back towards the midline if momentum subsides, but staying high should maintain upward pressure.
Immediate resistance is seen at the record high at $4,643, followed by the upper boundary of the rising wedge around $4,660. A break above this confluence resistance area would take the XAU/USD pair to the $4,700 level. On the downside, initial support lies at the nine-day moving average at $4,535.64, followed by the lower rising wedge boundary around $4,490.00.
(The technical analysis for this story was written with the help of an artificial intelligence tool.)
Frequently asked questions about gold
Gold has played a major role in human history as it has been widely used as a store of value and a medium of exchange. Currently, apart from its luster and use in jewellery, the precious metal is widely viewed as a safe haven asset, meaning it is a good investment during turbulent times. Gold is also widely viewed as a hedge against inflation and currency depreciation because it is not dependent on any specific issuer or government.
Central banks are the largest holders of gold. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and purchase gold to improve the perceived strength of the economy and the currency. High gold reserves can be a source of confidence for a country’s solvency. Central banks added 1,136 tons of gold worth about $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest annual purchase since records began. Central banks in emerging economies such as China, India and Turkey are rapidly increasing their gold reserves.
Gold has an inverse relationship with the US dollar and US Treasuries, which are major reserve assets and safe havens. When the value of the dollar declines, gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rise in the stock market tends to weaken the price of gold, while a sell-off in riskier markets tends to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession could cause the price of gold to rise rapidly due to its safe-haven status. As a lower-yielding asset, gold tends to rise as interest rates fall, while a higher cost of money usually negatively impacts the yellow metal. However, most of the moves depend on how the US Dollar (USD) behaves as the asset is priced in Dollars (XAU/USD). A stronger dollar tends to keep the price of gold in check, while a weaker dollar is likely to push gold prices higher.
