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    Gold Declines on Federal Policy Anticipation

    January 28, 2025

    Key Points

    • Spot gold declined to $2,740.16 per ounce, reflecting a 1.10% intraday drop as of the latest session.
    • Prices fluctuate within a range of $2,736.42 to $2,745.28, indicating continued market volatility.
    • Traders await Fed policy decisions and assess potential impacts of President Trump’s economic agenda.

    Gold prices slipped further on Tuesday, trading at $2,740.16 per ounce, marking a 1.10% intraday drop as seen in the latest trading session. The yellow metal continued its decline after Monday’s sell-off, reflecting lingering market volatility and trader caution ahead of the Federal Reserve’s policy meeting.

    After reaching a high of $2,745.28, spot gold encountered renewed selling pressure, dropping to a low of $2,736.42, as reflected in the chart. This downward momentum challenges earlier assertions of price stability, highlighting gold’s sensitivity to shifting market sentiment.

    Technical Analysis

    Picture: Gold struggles at 2740 with bearish momentum and critical support at 2730 in focus, as seen on the VT Markets app.

    Gold (XAU/USD) is trading at 2740.16, down 1.10%, as it continues to follow a bearish trend. The price remains below the short-term 5 and 10-period moving averages, reinforcing downward momentum. Meanwhile, the price is testing the 30-period moving average, suggesting a possible consolidation phase. The MACD histogram remains below zero with widening bars, confirming bearish momentum, though traders should watch for a potential bullish crossover as the MACD line shows signs of converging with the signal line.

    Traders should monitor price action at the 2730 support level for signs of breakdowns or rebounds. Additionally, developments in the MACD could indicate a short-term reversal if a bullish crossover materializes. As always, updates from the Fed and key global economic data will play a pivotal role in determining gold’s medium-term direction.

    Fed Policy in Focus

    Traders remain cautious as Federal Reserve policymakers prepare to meet, with expectations for a pause in rate adjustments. However, potential forward guidance on rate cuts could significantly influence the trajectory of Treasury yields and, consequently, gold prices.

    “If Fed Chair Jerome Powell hints at the possibility of rate cuts, it could pressure Treasury yields and lend support to gold,” said Tim Waterer, chief market analyst at KCM Trade.

    Despite this, gold faces headwinds from broader market uncertainties. President Donald Trump’s calls for rate cuts and continued fiscal stimulus measures may shape the Fed’s outlook in the coming months. With ongoing market volatility and critical Fed policy decisions imminent, gold prices may continue to fluctuate in the near term. Further market cues will likely emerge from Fed communications and global economic data.

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