Anticipation prevails in gold markets hours before Trump’s inauguration

The price of gold stopped a three-day rise to remain below the highest level recorded in December at $2,726 per ounce, ahead of the inauguration of US President Donald Trump, according to what the Forex platform reported.
Gold prices end a three-day rise before Trump’s inauguration
Gold price is struggling to extend the series of gains as it retreats from the monthly high of $2,725 and the price may continue to trade within the November range as it remains below US pre-election prices.

Gold and Trump’s executive orders

However, the Trump administration’s executive orders could lead to greater volatility in the price of gold if the Fed responds to the change in fiscal policy and the threat of major central banks making a mistake could keep bullion afloat as an alternative to fiat currencies.
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Fed signals and gold prospects

Gold gained momentum after inflation data came in weaker than expected as the Consumer Price Index rose 0.2% monthly and slowed to 3.2% yearly while core inflation data also came in below expectations.
The Producer Price Index numbers reinforced this trend, raising hopes that the Federal Reserve will ease policy earlier than expected.
Fed Governor Christopher Waller has supported these expectations by pointing out the possibility of cutting interest rates several times if inflation continues to slow.
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Futures markets are now pointing to roughly equal odds of two interest rate cuts before the end of the year.
Interest rate cuts usually benefit gold by reducing the opportunity cost of holding non-yielding assets as the dollar weakens, which enhances its attractiveness to global investors.

Bonds support gold’s rise

Lower US Treasury yields support gold prices
The decline in US Treasury bond yields enhanced the attractiveness of gold, as the yield on ten-year bonds decreased by 13 basis points, while the yield on two-year bonds decreased by 10 basis points, which indicates increased investor expectations for a less restrictive monetary policy.
Lower yields reduce the attractiveness of bonds compared to gold, which provides additional support for the metal.
Traders are also awaiting the release of construction data, which may provide additional insights into economic conditions.
A weak report on the housing market may reinforce expectations that the Federal Reserve will ease its monetary policies, which may enhance the attractiveness of gold further.

Resistance levels in gold

Resistance for gold stands at $2,726.30, which is a critical level for a possible breakout, according to what the FX Empire platform reported.
A move above this level may pave the way for a challenge to the $2,790.17 high.
On the downside, support is located at $2,663.40 with the 50-day moving average at $2,645.07 as a key benchmark to maintain bullish signs.

Gold market forecast

Gold remains well positioned to benefit from the Fed’s dovish stance and economic data.
Sustained support above $2,645.07 would sustain the bullish outlook while a break above $2,726.30 could indicate more bullish momentum.