Gold drops to 2-month low as Usd and yields rise, testing support
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Gold prices have slipped to a fresh two-month low around $2,554 due to ongoing USD strength and high US bond yields fueled by the post-election “Trump trade” optimism. Technically, the yellow metal faces potential downside to the $2,542-$2,538 support zone, with resistance near $2,580 and $2,600 should recovery attempts gain traction. Traders now await US jobless claims and PPI data, with Fed Chair Powell’s speech in focus.
Gold Slips to Two-Month Low Amid Post-Election USD Rally and High Yields
Gold prices continue to slide, hitting a two-month low near $2,554 on Thursday as the USD rallies to a new year-to-date high. Optimism over expansionary policies by President-elect Trump, including anticipated tax cuts and tariffs, supports the USD and boosts US bond yields, shifting investor interest away from the non-yielding metal.
High Inflation Expectations and Fed’s Rate Cut Path
Wednesday’s CPI data, showing a 2.6% increase annually, supports the USD by slowing the market’s expectations for aggressive Fed rate cuts in 2025. The probability of a December rate cut is now over 80%, but future easing may be limited by potential inflation from Trump’s fiscal policies. Fed officials have suggested caution, further elevating bond yields and strengthening the USD.
Technical Outlook: Downside Bias Prevails
From a technical standpoint, the recent breakdown below $2,600—a 38.2% Fibonacci retracement of the June-October rally—signals bearish pressure. Key technical levels include:
Support: The $2,542-$2,538 range, which aligns with the 100-day SMA and 50% Fibonacci retracement level, marks a crucial support zone. A break below this area could expose the $2,500 psychological mark.
Resistance: Immediate resistance lies at $2,580, followed by the $2,600 mark. A sustained recovery above $2,600 could trigger short-covering toward the $2,630-$2,632 region. Outlook
As markets anticipate US PPI and jobless claims data along with Fed Chair Powell’s speech, gold remains pressured. Continued USD and bond yield strength, combined with a cautious Fed, suggest limited upside for gold, with the path of least resistance pointing downward toward key support levels.
Gold Slips to Two-Month Low Amid Post-Election USD Rally and High Yields
Gold prices continue to slide, hitting a two-month low near $2,554 on Thursday as the USD rallies to a new year-to-date high. Optimism over expansionary policies by President-elect Trump, including anticipated tax cuts and tariffs, supports the USD and boosts US bond yields, shifting investor interest away from the non-yielding metal.
High Inflation Expectations and Fed’s Rate Cut Path
Wednesday’s CPI data, showing a 2.6% increase annually, supports the USD by slowing the market’s expectations for aggressive Fed rate cuts in 2025. The probability of a December rate cut is now over 80%, but future easing may be limited by potential inflation from Trump’s fiscal policies. Fed officials have suggested caution, further elevating bond yields and strengthening the USD.
Technical Outlook: Downside Bias Prevails
From a technical standpoint, the recent breakdown below $2,600—a 38.2% Fibonacci retracement of the June-October rally—signals bearish pressure. Key technical levels include:
Support: The $2,542-$2,538 range, which aligns with the 100-day SMA and 50% Fibonacci retracement level, marks a crucial support zone. A break below this area could expose the $2,500 psychological mark.
Resistance: Immediate resistance lies at $2,580, followed by the $2,600 mark. A sustained recovery above $2,600 could trigger short-covering toward the $2,630-$2,632 region. Outlook
As markets anticipate US PPI and jobless claims data along with Fed Chair Powell’s speech, gold remains pressured. Continued USD and bond yield strength, combined with a cautious Fed, suggest limited upside for gold, with the path of least resistance pointing downward toward key support levels.