Gold Holds Strong Amid Fed Policy Fog and Escalating Global Tensions

Gold prices remain resilient, with the precious metal hovering near critical support levels as market participants weigh mixed signals from US monetary authorities and heightened geopolitical uncertainty. The latest developments suggest that XAU/USD’s near-term trajectory will hinge on policy clarity from the Federal Reserve and the trajectory of international peace negotiations.

Technical Setup Favors Further Gains for Gold Prices Globally

From a technical perspective, gold’s uptrend remains intact despite recent profit-taking. The Relative Strength Index (RSI) indicates strong buying momentum, with the indicator venturing into overbought territory—a sign that upward pressure persists. Current resistance sits at the seven-week peak of $4,353, with potential targets toward $4,381 (the all-time high), $4,400, and ultimately $4,500 on the upside. Support levels form at $4,285, $4,250, and $4,200 should sellers gain traction. Today’s gold prices across major markets reflect this technical resilience, though sentiment remains fragile ahead of key data releases.

Fed Uncertainty and Inflation Debate Create Conflicting Signals

Federal Reserve officials have painted a murky picture regarding the path forward, with division evident among policymakers. Kansas City Fed Jeffrey Schmid struck a hawkish tone, arguing that inflation remains “too hot” and that current policy is insufficiently restrictive to bring price growth under control. Meanwhile, Chicago Fed President Austan Goolsbee advocated patience, projecting 50 basis points of rate cuts if economic conditions evolve as expected—a notably dovish stance that contrasts sharply with his hawk colleagues.

Philadelphia Fed President Anna Paulson highlighted labor market weakness, though she anticipates inflation moderation as tariff impacts fade through 2025. Cleveland Fed Beth Hammack similarly emphasized elevated inflation risks and preferences for tighter policy conditions.

The lack of consensus among Fed officials—compounded by recent Consumer Price Index data delays and a government shutdown that’s distorting economic readings—has left investors uncertain about 2025’s monetary trajectory. This fog creates a supportive environment for gold, traditionally viewed as an inflation hedge and insurance against policy missteps.

Weak Labor Data and Geopolitical Friction Amplify Safe-Haven Demand

US jobless claims for the week ending December 6 rose to 236,000, marking a sharp increase from the prior week’s 192,000. Continuing claims edged lower to 1.838 million, suggesting some stabilization in longer-term joblessness. However, the overall labor data remains softer than expected—precisely the kind of economic softness that could complicate the Fed’s policy calculus and support haven assets like gold.

On the geopolitical front, Russia-Ukraine peace negotiations have stalled. The White House indicated frustration with negotiations’ pace, with US President Trump disappointed in Ukraine’s reluctance to accept the proposed settlement framework. These diplomatic tensions maintain a premium on defensive assets, keeping gold bids steady despite broader market movements.

The Dollar’s Flat Stance Removes Headwinds

The US Dollar Index remains essentially flat near 98.35, providing neither significant tailwind nor headwind for gold prices. More importantly, US real yields—which exhibit inverse correlation with bullion—have edged lower to 1.872%, falling roughly 2.5 basis points. The 10-year Treasury yield, meanwhile, has risen four basis points to 4.19%, reflecting modest repricing of longer-duration risk assets.

This combination of lower real yields and persistent yield uncertainty tends to support gold valuations across different regions and timeframes, including gold prices relevant to Australia and other markets today.

Looking Ahead: Consolidation Before the Next Breakout?

Gold’s recent pullback from $4,353 appears more tactical than fundamental in nature. Traders have booked profits after an impressive weekly advance, yet the broader backdrop—Fed indecision, labor softness, and geopolitical friction—provides substantial underpinning for prices to revisit and overcome current resistance levels. Investors watching gold prices globally should monitor the next round of inflation data, Fed speakers’ remarks, and any developments in international peace talks as these will likely determine whether bullion resumes its climb toward $4,400 and beyond.