On Monday (December 16) during the New York trading session, spot Gold experienced a 'high board plunge' scenario, leading to a close that retraced most of the day's gains. An Israeli minister stated that 'never has an agreement on the hostages in Gaza been so close,' which cooled market risk aversion.
In the early session of the New York period, Gold prices briefly touched $2664.43 per ounce, but then sharply declined, hitting a low of $2648.25 per ounce.
(Spot gold 30-minute chart, source: 24K99)
As of the close on Monday, Gold prices slightly rose by 0.15%, settling at $2652.24 per ounce.
FXStreet Analyst Christian Borjon Valencia pointed out that the Federal Reserve will hold its last meeting of the year on December 17 and 18. The market generally expects the Federal Reserve to cut rates by 25 basis points, but traders are focused on the release of the economic projections summary (SEP) to gauge the interest rate trend for 2025.
Lower interest rates are generally a favorable factor for non-yielding assets like Gold. However, more people speculate that the incoming Trump administration is hinting at fiscal policies that could easily trigger inflation, which may lead the Federal Reserve to take a gradual stance.
CME's 'FedWatch Tool' shows that traders expect a 96% chance of the Federal Reserve cutting rates by 25 basis points on Wednesday.
In addition, investors are betting that the Federal Reserve will cut interest rates by 100 basis points in 2025.
Israel claims it is "closer than ever" to reaching an agreement regarding hostages in Gaza.
Valencia noted that in environments with high geopolitical risks, Gold prices tend to rise, but this risk has recently eased.
According to the Israel Times on Monday, Israel's Defense Minister Katz told Israeli lawmakers that Israel is "closer than ever" to reaching an agreement with Hamas to release hostages held in Gaza. Katz is very optimistic about the possibility of reaching an agreement in the coming weeks.
(Screenshot source: Israel Times)
Katz's comments to the Israeli Parliament's Foreign Affairs and Defense Committee were made behind closed doors, but his statements were widely reported by the media.
Katz stated, "Israel is closer than ever to reaching another hostage agreement." This aligns with comments made by Israeli Prime Minister Netanyahu on Sunday after discussing efforts to release Gaza hostages abducted by Hamas with U.S. President-elect Trump.
Netanyahu stated in a statement after the phone call: "We have been working hard, without rest, to bring our hostages home." However, he did not disclose details.
Katz also predicted that the agreement on the negotiating table would receive support from the majority of the coalition government members and should not face internal obstacles.
How to trade gold?
FXStreet Analyst Christian Borjon Valencia pointed out that the upward trend of Gold prices remains unchanged, but it is still trading below the 50-day moving average (SMA) of $2670 per ounce.
Valencia stated,Relative Strength Index(RSI) Falling below the neutral line indicates that sellers are in control of the situation. If the price of Gold falls below 2650 USD/ounce, the nextResistancewill be the 100-day moving average at 2600 USD/ounce.
If Gold weakens further, the next target for sellers will be the August 20 high of 2531 USD/ounce.
(Spot gold daily chart source: FXStreet)
On the other hand, Valencia added that, conversely, if the price of Gold remains above 2650 USD/ounce, the next Resistance will be the 50-day moving average at 2670 USD/ounce; once this Resistance is broken, the price of Gold will encounter the next obstacle at 2700 USD/ounce.
