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Gold resumes rise as investors await Fed rate decision

Gold resumes rise as investors await Fed rate decision
Youssef Eid

January 27, 2025

Gold rose slightly at the beginning of the week as the RSI showed positive momentum on the four-hour chart, where the price moved above the 50 level. Meanwhile, markets are waiting for a four-hour candle close above the SMA 9 on the 4-hour chart to confirm the resumption of the major bullish trendline.

Meanwhile, gold is trading above the weekly pivot point at $2748, which is a strong level as it represents the lower line of the bullish channel. If the price manages to stabilize above this point, this will be a strong signal for further positive momentum, potentially reaching a new all-time high at $2808 then $2845.

On the downside, if gold breaks below the lower line of the bullish channel, it may start a corrective downward movement towards the first weekly support level at $2,711. Shall the price hold below $2711, the next move will probably be downward, targeting support at $2652.

On the other hand, investors are closely watching the release of several important economic data this week, which could have a significant impact on short-term market trend. The main highlight will be the Federal Reserve’s interest rate decision, noting that analysts predict U.S. policymaker to keep rates unchanged at 4.5%.

In Europe, the European Central bank (ECB) will announce its interest rate decision. Unlike the Fed, the ECB is expected to take rates down to 2.9% from 3.15%. Theoretically speaking, an ECB rate cut would have a negative impact on the euro and a positive one for the dollar. It is worth noting that U.S. President Donald Trump had urged central banks all over the world to cut interest rates.  

On the U.S. data front, eyes will focus high-relevance economic reports such as GDP, core Personal Consumption Expenditures (PCE) index, and Consumer Confidence Index.

However, the Core PCE Price Index is likely to grab attention since it is the Fed’s favorite inflation gauge. Expectations refer to an annual inflation of 2.8% in December, unchanged from the previous reading. A higher than forecast inflation rate may prompt the Fed to maintain its gradual rate cut path this year, while a rapid fall in prices could accelerate the process of rate cuts.