VT 
The final week of December has brought a quieter tone to global markets, with liquidity thinning as traders step away for the Christmas holidays. Yet gold continues to attract safe-haven flows, reflecting lingering geopolitical and macroeconomic risks.
Middle East tensions remain elevated, with energy markets volatile and investors hedging against potential supply disruptions. In Europe, fiscal debates over budget sustainability and social spending have kept uncertainty alive, while in Washington, lawmakers remain divided over deficit reduction versus stimulus measures. These unresolved issues have reinforced the appearl of gold as a defensive asset.
At the same time, the December policy stance from the Federal Reserve continues to weigh on sentiment. While inflation data has cooled, Fed officials have signaled caution, leaving markets uncertain about the timing of the first rate cut. This policy ambiguity has injected volatility into U.S. bond yields and the dollar, both critical drivers for gold. In thin holiday trading conditions, even modest shifts in expectations can trigger outsized moves, keeping safe-haven demand elevated.
XAU/USD Technical Outlook: Key Levels to Watch
Gold is trading with a firm tone this Christmas week, holding above $4,385 after early buying interest in the Asian session reinforced the prevailing bullish bias. Price action remains supported within a bullish channel formation, with trend line resistance located at $4,466. Previous resistance at $4,375 now acts as support, and bespoke demand at $4,385 has emerged as a key entry point for long positions.
- Support zone: $4,385
- Resistance zone: $4,466 followed by $4,546
- Downside risk: A break below $4,355 would negate the immediate bullish setup and suggest a deeper retracement.
- Bullish strategy: Buy at $4,385, targeting $4,466 and $4,546. Maintain stops at $4,355 to limit downside risk.
- Bearish strategy: Avoid shorts while price holds above $4,385. Only reassess bearish exposure if a sustained break below $4,355 occurs.
- Range play: Trade tactically within the $4,385–$4,466 band until a decisive breakout develops. Bias remains bullish while above $4,385.
Looking Ahead: Holiday Calm, But Risks Linger
With global liquidity thin during Christmas week, movements of gold may be exaggerated by smaller flows. Traders should remain alert to geopolitical headlines and Fed-related commentary, both of which could spark volatility in an otherwise quiet market.
Click here to open account and start trading.
