For three consecutive sessions, gold prices have attempted to rebound, aiming to recover losses sustained the previous week when the price fell to a support level of $2,583 per ounce. Despite these recovery attempts and the US dollar pausing its recent gains, gold's upward momentum has been limited, with prices failing to breach the $2,633 per ounce resistance level. As of this analysis, gold stabilizes near $2,611 per ounce.

The ongoing holiday season has resulted in weak market liquidity, causing gold prices to move within narrow ranges, a trend expected to persist through the Christmas period.

Gold Analysis for December 24: Low Liquidity Impact

Will Gold Prices Rise Tomorrow?

Market forecasts suggest that spot gold prices may continue to climb if the US dollar weakens from its current two-year high. The recent recovery in gold prices coincided with a decline in the US dollar, following the release of favorable US inflation data for personal consumption expenditures. This renewed optimism for potential monetary easing by the US Federal Reserve in 2025.

Previously, the Federal Reserve signaled a cautious approach to interest rate reductions, which had pushed gold prices to monthly lows. However, near-term gold performance may face headwinds from reduced physical demand in India, one of the world's largest gold consumers. Indian government officials predict a significant drop in December gold imports, adding further pressure on prices.

The US Dollar Index at a Two-Year High

Gold prices remain closely tied to the performance of the US dollar. The US Dollar Index (DXY), which tracks the greenback's strength against a basket of major currencies, has surged towards a two-year peak of 108.00. This rise reflects ongoing market assessments of the Federal Reserve’s hawkish policy outlook following last week’s meeting.

Projections from the Federal Open Market Committee (FOMC) indicate a planned reduction in US interest rates by 50 basis points throughout 2025. However, rates are expected to remain higher than previously anticipated. Meanwhile, cautious monetary policy signals from central banks like the European Central Bank, Bank of England, Bank of Japan, and the Swedish Riksbank, along with sharper-than-expected rate cuts by the Swiss National Bank, have weighed on other currencies within the DXY basket.

The US dollar also gained support from President Biden’s recent approval of a congressional funding bill, averting a government shutdown before year-end.

10-Year US Treasury Yields Extend Gains

The yield on 10-year US Treasury bonds has continued to climb, surpassing 4.55% and nearing the seven-month high of 4.58% recorded earlier this month. This rise reflects market expectations of fewer interest rate cuts by the Federal Reserve in 2025 compared to initial projections. The cautious stance stems from concerns over persistent inflation risks and reduced demand for fixed-income assets.

Additionally, inflation fears have been exacerbated by potential tariff measures targeting Mexico, the European Union, and China. Investors are also moving away from safe-haven bonds following the approval of the US government’s spending bill, which eased immediate fiscal uncertainties.

Trading Insights: Bullish Momentum for Gold

Despite recent fluctuations, gold remains in a bullish market. Gold bullion prices have risen over 27% in 2024, marking the largest annual gain since 2010. This rally is supported by easing US monetary policy, robust demand for safe-haven assets, and sustained gold purchases by central banks worldwide.

Technical Outlook

Analysts predict that gold prices will maintain an upward trajectory. Key resistance remains at $2,700 per ounce, with buying opportunities emerging around $2,585 and $2,566 per ounce. Traders are advised to exercise caution, using take-profit and stop-loss orders to mitigate risks from sudden price reversals.

As liquidity is expected to remain low due to holiday closures, market movements will likely be subdued and less predictable throughout the week.