Technical Momentum Keeps Gold Bid Despite Profit-Taking—What's Holding XAU/USD Above $4,300

Gold (XAU/USD) is painting a resilient technical picture even as traders harvest some of the week’s outsized gains. After hitting a seven-week peak of $4,353, the precious metal has retreated modestly to $4,302, but the underlying structure suggests buyers remain firmly in command.

The Fed Puzzle: Inflation Concerns Clash With Murky Data Visibility

The Federal Reserve’s messaging this week highlighted a core tension—policymakers are fractured on whether inflation has truly cooled. With government shutdowns distorting economic readings, the central bank faces a data vacuum at a critical moment.

Fed dissenters painted a hawkish picture. Kansas City’s Jeffrey Schmid flagged inflation as “too hot” and argued policy should stay restrictive longer. Cleveland Fed Beth Hammack echoed similar concerns, viewing the current rate as neutral at best and advocating for tighter conditions to combat stubborn price pressures. By contrast, Chicago Fed Austan Goolsbee took a more dovish stance, projecting 50 basis points of rate cuts next year if economic conditions cooperate.

The employment backdrop reinforced this divide. Initial jobless claims jumped to 236K from 192K the prior week, signaling softness in the labor market. Yet continuing claims dipped to 1.838 million, suggesting longer-term unemployment may be stabilizing—a mixed signal that leaves rate-cut timing uncertain.

CPI data remains the missing ingredient. With inflation readings sparse due to shutdown distortions, Fed officials are operating partially blind, which is keeping policy expectations volatile and indirectly supporting Gold demand as a uncertainty hedge.

Why Geopolitical Risk Matters for the Yellow Metal Right Now

Russia-Ukraine peace negotiations have stalled, with the Trump administration expressing frustration over disagreements between Washington and Kyiv. This geopolitical friction typically elevates safe-haven flows into commodities like Gold, providing a subtle tailwind beneath XAU/USD even when other fundamentals don’t fully justify it.

Technical Setup: Gold Remains Constructive Despite Pullback

The daily chart tells a bullish story. Gold’s Relative Strength Index sits in overbought territory, confirming that buying pressure has been intense, yet this doesn’t necessarily signal exhaustion—it simply reflects strong conviction. As long as XAU/USD holds above $4,300, the uptrend framework remains intact.

Breaking above Friday’s high of $4,353 would target the all-time record of $4,381. A close beyond that opens the door to $4,400, $4,450, and the psychological $4,500 level. On the flip side, a breakdown through the December 11 high of $4,285 would invite selling down to $4,250 and potentially $4,200.

US Treasury yields ticked higher (10-year at 4.19%), but real yields—which move inversely to precious metals—actually declined to 1.872%, providing a lift for Gold. The US Dollar Index remains flat near 98.35, meaning Greenback strength isn’t curbing bullion appeal.

The Takeaway: Gold Finds Its Sweet Spot in Uncertainty

Gold prices continue to demonstrate technical resilience and fundamental support from policy uncertainty, soft employment data, and lingering geopolitical tensions. Until the Fed clarifies its 2025 rate path and CPI readings become available post-shutdown, expect precious metals to benefit from the confusion premium.