Gold faced pressure in its attempt to record new gains, as it continues to trade below recent highs due to multiple factors. These include geopolitical risks, escalating tensions in the Middle East, and concerns over trade wars, which provide some support to gold prices. Additionally, the Federal Reserve’s hawkish monetary policy decisions act as a barrier to gold’s rise.
The Federal Reserve recently announced its intention to slow the pace of interest rate cuts in 2025, leading to an increase in U.S. Treasury yields. The yield on the 10-year Treasury bond reached its highest level since May. These developments strengthen the U.S. dollar, which is trading near its two-year high, adding pressure on gold and reducing its chances of achieving strong gains.
In terms of trading, gold hit a one-month low last week amid weak trading volumes, prompting investors to hold back before making significant market entries.
On the economic front, traders are awaiting the release of the Richmond Manufacturing Index, which is expected to play a role in determining the direction of the U.S. dollar. This, alongside the impact of Treasury yields, will influence gold prices during the Christmas holiday period.
