Global Markets Steady as Gold Pulls Back, Oil Firms and FX Reacts to Policy Signals | 29th December

Gold Retreats, Markets Steady

Global financial markets traded with a steady tone as investors digested mixed signals across commodities and currencies. Gold eased from record highs amid profit-taking, while oil prices firmed on improving demand expectations and supportive macro developments. In the FX space, major currencies reacted to shifting central bank signals, with the Pound and Australian Dollar holding firm while the Yen softened following policy guidance from the Bank of Japan. Overall, markets remain focused on the evolving monetary policy outlook heading into the final trading sessions of the year.

Gold (XAU/USD) Forecast

Current Price and Context

Gold prices have edged lower after hitting fresh record highs, as traders lock in profits following a strong rally driven by easing monetary policy expectations and safe-haven demand.

Key Drivers

Geopolitical Risks: Rising tensions in key regions maintain underlying demand for safe-haven assets.

US Economic Data: Slower-than-expected economic indicators support continued gold interest.

FOMC Outcome: Expectations of future Fed rate cuts remain bullish for gold.

Trade Policy: Stable trade conditions reduce immediate impact on gold prices.

Monetary Policy: Dovish Fed outlook keeps gold supported against the USD.

Technical Outlook

Trend: Bullish with near-term profit-taking

Resistance: 2,075

Support: 2,030 / 2,000

Forecast: Gold may consolidate in the short term before resuming upward momentum.

Sentiment and Catalysts

Market Sentiment: Cautiously bullish

Catalysts: US economic data, Fed commentary, geopolitical developments

GBP/USD Forecast

Current Price and Context

GBP/USD has edged above 1.3500 as the US Dollar softens amid Fed rate cut expectations. Sterling finds support from relative stability in UK policy and resilient economic indicators.

Key Drivers

Geopolitical Risks: Limited immediate risk events affecting GBP.

US Economic Data: Soft US data supports the pair’s upside.

FOMC Outcome: Market expectations of Fed easing provide GBP strength.

Trade Policy: No new trade developments impacting GBP/USD.

Monetary Policy: Bank of England’s cautious stance stabilizes Sterling.

Technical Outlook

Trend: Bullish bias

Resistance: 1.3600

Support: 1.3450 / 1.3380

Forecast: GBP/USD may continue to grind higher, with resistance near 1.3600.

Sentiment and Catalysts

Market Sentiment: Mildly bullish

Catalysts: UK economic updates, US macro releases

WTI Crude Oil Forecast

Current Price and Context

WTI trades above $57.00 as Chinese fiscal plans support global demand. Geopolitical risks and a softer US Dollar also add to short-term bullish pressure.

Key Drivers

Geopolitical Risks: Tensions in key oil-producing regions maintain a supply premium.

US Economic Data: Slower US growth expectations support commodity demand.

FOMC Outcome: Fed easing boosts risk appetite, indirectly supporting oil.

Trade Policy: No major trade disruptions affecting oil.

Monetary Policy: Low yields and weaker USD underpin commodity strength.

Technical Outlook

Trend: Short-term bullish

Resistance: 58.50 / 60.00

Support: 56.00 / 54.80

Forecast: Oil may continue to edge higher if demand optimism persists.

Sentiment and Catalysts

Market Sentiment: Constructive

Catalysts: China fiscal updates, inventory reports, geopolitical developments

USD/JPY Forecast

Current Price and Context

USD/JPY dips toward 156.00 as the Bank of Japan signals potential policy tightening in 2026. The Yen strengthens amid narrowing yield differentials with the US and stable risk sentiment.

Key Drivers

Geopolitical Risks: Limited near-term impact.

US Economic Data: Weak USD trends support Yen appreciation.

FOMC Outcome: Rate cut expectations put additional pressure on USD/JPY.

Trade Policy: Stable trade environment for Japan.

Monetary Policy: BoJ hints at tightening, supporting the Yen.

Technical Outlook

Trend: Bearish correction in the short term

Resistance: 157.50

Support: 155.50 / 154.80

Forecast: Further downside possible if BoJ rhetoric strengthens.

Sentiment and Catalysts

Market Sentiment: Cautiously bearish

Catalysts: BoJ communication, US yield movements

AUD/USD Forecast

Current Price and Context

AUD/USD steadies near 14-month highs, driven by rising expectations for a hawkish RBA stance amid persistent inflation pressures and improving risk sentiment.

Key Drivers

Geopolitical Risks: Limited impact, though regional developments could affect sentiment.

US Economic Data: Softer US data supports AUD strength.

FOMC Outcome: Fed rate cut expectations weaken USD, benefiting AUD.

Trade Policy: Supportive China fiscal outlook adds positive bias.

Monetary Policy: RBA expectations of sustained rates underpin the pair.

Technical Outlook

Trend: Bullish

Resistance: 0.6900

Support: 0.6750 / 0.6680

Forecast: Pair likely remains supported, with dips attracting buying interest.

Sentiment and Catalysts

Market Sentiment: Bullish

Catalysts: Australian inflation data, China fiscal news

Wrap-up

Looking ahead, market participants are likely to remain cautious as liquidity thins and attention stays fixed on central bank policy signals and macroeconomic developments. Commodities may continue to see consolidation after recent strong moves, while FX markets could remain sensitive to any shifts in rate expectations. With risk sentiment broadly stable, short-term price action is expected to be driven by data surprises and policy-related headlines.

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