The Federal Reserve has indicated that it requires more evidence of economic weakness and subdued inflation to consider loosening its monetary policy further. Amid these signals, the US Dollar (USD) remains near its monthly low, raising concerns about a possible policy clash between the Fed and President Trump. This comes as traders keep a close watch on upcoming global Manufacturing and Services PMI reports, which could provide critical insights into economic prospects.
Gold prices have remained strong, comfortably holding above all major daily simple moving averages (SMA), reinforcing a bullish stance. Earlier this month, gold charted a symmetrical triangle breakout, and traders are now flirting with three-month highs near $2,760. The 50-day SMA recently closed above the 100-day SMA, confirming a Bear Cross pattern, which has added to the upward momentum. As the market awaits clarity on President Trump's trade policies, the 14-day Relative Strength Index (RSI) sits just below the overbought region at 69, suggesting room for further gains.
President Trump's advocacy for low taxes and light-touch regulation is generally seen as positive for economic growth. However, his calls for a lower USD and interest rates globally, articulated during the World Economic Forum virtual speech, have introduced new dynamics into currency markets. This has led to a weakening of the Japanese Yen due to a risk-on mood, thereby underpinning USD/JPY movements. The currency pair attracted dip-buying interest, advancing above 156.00 on Friday amid repositioning ahead of the Bank of Japan's (BoJ) key policy decision.
In addition to these developments, market participants are closely monitoring the S&P Global preliminary US business PMI data. This data is expected to shed light on the economic outlook and may influence market sentiment further. As investors await these insights, Bitcoin is also in focus, trading near $103,000 following President Trump's executive order to establish a Presidential Working Group on digital assets.
The gold market continues to draw interest as traders anticipate the impact of upcoming data releases. The current short-term technical outlook for gold remains largely unchanged, with its price comfortably above major SMAs. This technical strength underscores the bullish case for gold in the current environment.
The USD's position near its monthly low reflects ongoing concerns about a potential Fed-Trump policy clash. The Fed has made it clear that it needs more evidence of economic frailty and subdued inflation before considering further policy easing. This stance comes at a time when President Trump's policies are seen as favorable for growth but have raised questions about their implications for currency markets.
The risk-on sentiment has undermined traditional safe-havens like the Japanese Yen, lending support to the USD/JPY pair. As the pair advances above 156.00, market participants are keenly watching for any signals from the BoJ's policy decision that might impact its path forward.
Gold's recent symmetrical triangle breakout and its position above key SMAs highlight its resilience in the face of macroeconomic uncertainties. Traders are closely eyeing the global preliminary PMI reports for January as they seek more clarity on economic trends that could influence gold's trajectory.
Bitcoin's trading near $103,000 follows significant regulatory developments with President Trump’s executive order on digital assets. This move is expected to have far-reaching implications for the cryptocurrency market as it seeks more structured oversight.