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• Gold slightly shifted down in late trading on Friday, although it was still up 0.40% for the week amid geopolitical tensions.
• Mixed US economic data was released in the week. Higher Housing Starts and lower Building Permits had a minimal impact on gold.
• Fed Governor Waller's dovish comments seemed to suggest the potential for early rate cuts.

The price of gold dropped late in the North American trading session, but it finished the week with gains of around 0.40% as market players must now await the inauguration of US President-elect Donald Trump. Although the XAU/USD currency cross traded at the $2,701 mark, down approximately 0.44%, investors continued to buy the yellow metal due to political uncertainty.

The precious metal continued to be driven by geopolitics and politics in the United States. Although US Treasury bond yields remained unchanged, bullion buyers failed to push prices higher ahead of the weekend.

The US economic schedule showed that Housing Starts jumped double digits, though Building Permits contracted in December. Gold barely reacted to the news, as most of the data revealed during the week, led by Retail Sales featured on Thursday, seemed to suggest that the economy is solid.

Meanwhile, the US Dollar Index (DXY), which tracks the US dollar's performance against a basket of six peers, surged approximately 0.35% to the 109.34 mark.

On Thursday, Fed Governor Christopher Waller tilted dovish and commented that the US central bank could lower borrowing costs sooner and faster if the disinflation process evolves. Market participants priced in near-even odds that the Fed will cut rates twice by the end of 2025, and that the the first reduction will occur in June.

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Image Source: Prime Market Terminal

Next week, the US economic docket will feature the US Presidential Inauguration, the release of Initial Jobless Claims, and Flash PMI data.

Market Movers: The Price of Gold Was Pressured Ahead of the Weekend

• Gold fell as real yields remained firm on Friday. The 10-year Treasury Inflation-Protected Securities (TIPS) yield was virtually unchanged, at 2.18%.
• The US 10-year Treasury bond yield was unchanged at 4.618%, which was a headwind for the golden metal.
• US Housing Starts increased from 1.294 million to 1.499 million in December, a jump of 15.8% month-over-month.
• Building Permits for the same period shrank as permits dipped from 1.493 million to 1.483 million, a 0.7% drop.
• The latest inflation data and Fed Waller’s comments pressured the US dollar, as traders had grown confident the Fed would cut rates sooner rather than later. Waller didn’t rule out a cut in the March meeting, as inflation “is getting close to what our 2% inflation target would be.”

XAU/USD Technical Outlook: Gold Held Firm Near $2,700

Gold prices fell amid the lack of catalysts ahead of the weekend. Nonetheless, buyers would have to keep the XAU/USD pair's price above the $2,700 level to reach for the Dec. 12 high of $2,726. Once surpassed, the next stop would be the $2,750 level, followed by the all-time high at $2,790.

On the other hand, failure to achieve the previously mentioned outcome would mean gold could test the Jan. 13 swing low of $2,656, followed by the confluence of the 50- and 100-day Simple Moving Averages (SMAs) at the $2,639-$2,642 range.

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