Gold Price Forecast: XAU/USD slides to near $2,600 as US Dollar bounces back

• Gold price falls to near $2,600 after the US Dollar recovers losses and turns positive.
• The US Dollar gains as the Fed signals fewer interest rate cuts for 2025.
• Market experts project the Fed to resume the policy-easing cycle in March.

Gold price (XAU/USD) falls to near the weekly low of $2,600 in Monday's North American session. The precious metal faces selling pressure as the US Dollar (USD) recovers intraday losses and turns positive, with the US Dollar Index (DXY) returning above 108.00. The higher US Dollar makes the Gold price an expensive bet for market participants.

10-year US Treasury yields tumbled to 4.55% on Monday. Lower yields on interest-bearing assets generally weigh on non-yielding assets, such as Gold, by increasing their opportunity costs. However, the relationship appears positive on Monday.

The outlook of the Gold price appears to be uncertain as the Federal Reserve (Fed) is expected to cut interest rates fewer times in 2025. Fed policymakers have guided smaller number of rate cuts for the next year as they are upbeat on the United States (US) economic growth. Additionally, a slowdown in the disinflation trend and better labor market conditions than what had been anticipated by Fed officials earlier are also responsible for the need for a gradual policy-easing cycle.

The Fed reduced its key borrowing rates by 100 basis points (bps) to the range of 4.25%-4.50% this year and is expected to leave them unchanged in January.

According to analysts at Goldman Sachs, the Fed is expected to deliver its next interest rate cut in March. The firm also expects two more in June and September.

Gold technical analysis

Gold price trades in a Symmetrical Triangle chart formation on a daily timeframe, which exhibits a sharp volatility contraction. The 20-day Exponential Moving Average (EMA) near $2,630 overlaps Gold's price, suggesting a sideways trend.

The Relative Strength Index (RSI) oscillates in the 40.00-60.00 range, indicating indecisiveness among market participants.

Looking up, the Gold price would strengthen after a decisive break above the December high of $2,726.00. On the contrary, bears would strengthen if the asset breaks below the November low around $2,537.00.

Gold daily chart