Gold Struggles Against the $4,355 Resistance Level as Dollar Strength Persists

Technical Breakdown: XAU/USD Trapped in a Consolidation Zone

Gold prices remain constrained within a defined technical framework on Friday, trading near $4,325 with limited directional conviction. The pair is wrestling with an ascending triangle pattern on the 4-hour timeframe, where sellers have repeatedly fended off attempts to breach the $4,355 resistance zone. The daily chart reveals elongated wicks, a telltale sign of indecision between buyers and sellers seeking a clear direction.

From a technical standpoint, the momentum indicators paint a nuanced picture. The Relative Strength Index sits at 54.64, holding marginally above the neutral 50 level, which suggests mild positive tilt without decisive conviction. Meanwhile, the Moving Average Convergence Divergence indicator remains underwater but shows signs of compression—the histogram is flattening, indicating diminishing bearish momentum. The $4,300 support has proven resilient over the past two sessions, establishing itself as the initial floor.

Price Targets and Technical Thresholds

Traders monitoring gold’s trajectory should watch for two key scenarios. On the downside, a breakdown would target the December 12 low of $4,257, followed by the triangle’s lower support around $4,290. Conversely, if buyers overcome the $4,355 hurdle, the 127.2% Fibonacci extension calculated from the December 9-12 advance points toward $4,400, with the triangle’s measured target situated at $4,450.

The $4,400 level holds particular significance for currency traders as well, given its implications for USD to CAD and other dollar-based pairs during sustained precious metals rallies.

US Dollar Dynamics: Supporting Headwinds for Gold

The greenback’s recent firmness is the primary headwind restraining precious metals from advancing. The US Dollar Index has climbed to one-week highs surpassing 98.50, maintaining strength despite lackluster inflation data released Thursday. This currency resilience reflects market positioning ahead of potential Federal Reserve rate cuts expected through 2026.

The weakness in gold, however, may be temporary. Widespread expectations that the Fed will lower borrowing costs further next year typically support precious metals by eroding real yields on dollar-denominated assets. This dynamic is likely to keep gold underpinned near its record territory, even as near-term consolidation persists.

Currency Correlation Overview

The shifting dynamics among major currency pairs highlight the broader market environment. The US Dollar demonstrated its strongest performance against the Japanese Yen, gaining 0.94%, while posting modest gains versus the Euro (0.08%) and Australian Dollar (0.08%). The British Pound showed minimal movement at 0.01%, while the Canadian Dollar, Swiss Franc, and New Zealand Dollar registered modest appreciation ranging from 0.02% to 0.43%. For traders calculating USD to CAD conversions at elevated gold levels around $4,400, these currency cross-currents become particularly relevant to international hedging and pricing strategies.

The interplay between gold’s technical constraints and the dollar’s near-term strength creates a narrow trading corridor, though medium-term bullish factors remain intact for precious metals.