Gold Price Forecast: XAU/USD rallies to one-month peak above $2,700

• Gold rallies as U.S. Treasury yields dip after rising unemployment claims and strong consumer spending.
• Retail sales up 0.4% MoM in December, November's figures revised up to 0.8%.
• Expectations for 2025 Fed rate cuts grow, with two reductions anticipated by year-end.

Gold soared after economic data from the United States (US) showed that consumer spending remained solid, while the number of people filing for unemployment benefits rose. This weighed on US Treasury yields and boosted the precious metal, which traded above the $2,700 figure for the first time since December last year.

Gold ascends to new highs, surpassed $2,700 as trades eye further Fed rate cuts

The yellow metal and the Greenback are trending up after Retail Sales for December rose by 0.4% MoM, missing the mark, but an upward revision of November figures to 0.8% showed the economy remains robust. On the negative front, Initial Jobless Claims for the week ending January 11 increased by 217K from 201K in the previous week, missing estimates of 210K.

Even though Retail Sales were solid and the US Treasury yield remained firm, Bullion buyers remained in charge, driving prices higher. Wednesday’s US inflation figures increased the chances that the Federal Reserve (Fed) will further ease policy in 2025.

Market participants are pricing in near-even odds that the Fed would cut rates twice by the end of 2025 and see the first reduction in June.

Recent Fed speaking has shown that officials remained concerned about the upcoming Trump administration's policies, some of which, like applying tariffs, are inflation-prone.

Ahead this week the economic docket will feature housing data and the release of US Industrial Production data.

XAU/USD Price Forecast: Technical outlook

Gold’s uptrend is set to continue, but buyers will face key resistance at $2,726, the December 12 high. A breach of the latter will expose $2,750 and the record high of $2,790. Conversely, if XAU/USD slips below $2,700, a pullback is seen toward the January 13 swing low of $2,656.

Momentum favors further upside, as the Relative Strength Index (RSI) depicts.