GoldPrice.

Happy Friday, traders. Welcome to our weekly market wrap, where we take a look back at these last five trading days with a focus on the market news, economic data, and headlines that had the most impact on gold prices and other key correlated assets— and may continue to in the future.

After initially looking as if they might re-trace last week’s modest gains, gold prices have surged higher this week, breaking above a key level and consolidating new support.

So, what kind of week has it been?

It looks as if there could be a lot of upward momentum and support for gold prices in the first quarter of this year, based on how trading played out over these last five sessions, cresting above the previous resistance at $2700/oz.

The week began with a step back. One week ago, of the two narratives that appear to be the prime motivations of short-term gold investment at the start of 2025— the FOMC/monetary policy input function and the lack of clarity (but abundance of rhetoric) around the incoming US administration’s fiscal policy plans—uncertainty about US fiscal policy and its impact on Dollar and Treasury markets had taken the lead on Friday as traders looked to safety away from USD and pushed gold spot higher. This Monday, we saw an unwinding of that move as traders locked back in on an expectation that the FOMC will stick to its current hawkish projection to cut interest rates just twice this year, pushing a surge in the US currency and a corresponding slide in gold prices.

Traders took a breather on Tuesday in gold and other major asset classes, with a big focus on Wednesday’s CPI report. And this is where robust in-flows returned to gold. Initial headlines around the updated consumer inflation data called out a modest uptick in overall inflation, although this was expected (per the market consensus) and remained below +3.0% YoY. What eventually took hold of investors’ focus, and then their imaginations, was an unexpected decline, however small, in “core-CPI” (ex. food and energy prices.) After a couple of months of generally stubborn inflation data, this pushes back to the forefront the possibility that over the first quarter or half of 2025, the ever “data dependent” Fed might be convinced to once again get more aggressive with cutting interest rates if inflation does resume its downward slope. As a result, the Dollar began what would be a considerable two-day slide. To corroborate this as a possibility, Fed Governor Waller publicly commented that such an improvement in inflation data could indeed convince the FOMC to again target three or even four cuts this year, and with revived hopes of a lower interest rate environment arriving even sooner, gold prices rebound steadily from mid-morning on Wednesday. This is not just going back to the holding ground of $2660, but also to and through the $2700 level from which the chart has not looked back since.

In the back half of this week, support for gold has held firm as investors moved past the one top-tier data point on the calendar and markets’ attention once again turned to the uncertainties of the incoming US administration, whose transition to power in Washington comes next week. After a market holiday on Monday, traders may need to brace for the spurts of volatility that often characterize a trading week dictated almost entirely by DC headlines and the related (possible) implications to the top global economy’s fiscal policy. There is sure to be a flurry of executive actions and other “grand” announcements in those first days, contrasted with an exceedingly light data calendar.

In the meantime, traders, I hope you can get out and safely enjoy your weekend for the next couple of days. After that, I’ll see you back here next week for another market recap.