Gold Price Analysis: Bullish Amid Trade War and USD Weakness
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Gold prices continue to exhibit strong upward momentum, holding steady above $2,650 and trading just shy of a four-day high near $2,658 during Friday’s European session. This bullish sentiment is driven by ongoing geopolitical tensions, concerns over US trade tariffs, and a weaker US Dollar (USD). However, expectations for a more cautious stance from the Federal Reserve on interest rate hikes could limit the precious metal's potential for further gains.
Key Drivers Supporting Gold Prices
The fear of a global trade war, triggered by US President-elect Donald Trump’s threat to impose tariffs on imports from Canada, Mexico, and China, has intensified demand for gold as a safe-haven asset. Additionally, rising geopolitical risks—such as Russia's threats to deploy hypersonic missiles—further fuel market uncertainty, reinforcing support for gold.
The USD is struggling to maintain recent gains, falling to a two-week low amid declining US Treasury bond yields. The benchmark 10-year US Treasury yield has dropped to its lowest point in two weeks, as markets anticipate a more cautious approach from the Fed in light of fiscal deficit concerns under President Trump's policies. Speculation about a potential rate cut at the Fed's December meeting is also weighing on the USD, with a 70% probability of a 25 basis point reduction. This has kept market participants on edge and limited the dollar’s upside potential.
Technical Analysis: Gold Tests Key Resistance Levels
Gold's break above the $2,649-$2,650 range has triggered a bullish signal. However, the metal faces significant resistance near $2,663-$2,664, aligning with the 50% Fibonacci retracement level of its recent decline. If gold can push through this level, it could target $2,677 (61.8% Fibonacci retracement) and the psychological barrier at $2,700. A decisive break above $2,700 would likely reinforce the bullish outlook.
Support levels are also important to monitor. The $2,650 zone remains immediate support, and a drop below this level could expose $2,633 and $2,620. The critical psychological level at $2,600 holds significant technical importance. A sustained break below $2,600 could open the path toward the 100-day Simple Moving Average (SMA) at $2,573 and the monthly low near $2,537-$2,536.
Momentum Indicators and Outlook
Momentum indicators suggest that gold still has room to rise. The 14-day Relative Strength Index (RSI) is not yet in overbought territory, indicating that there is potential for further gains. The 100-hour Simple Moving Average (SMA) near $2,650 now serves as key support, while the $2,663-$2,664 zone remains a critical resistance point.
Looking ahead, while gold prices retain a bullish bias due to trade war concerns and geopolitical risks, the potential for slower rate cuts by the Fed could limit further upside potential. A sustained move above $2,664 is essential to push prices towards $2,700, while a drop below $2,650 would signal a deeper correction, with potential support zones at $2,600 and beyond.
Market Conditions and Volatility
With no major US economic data releases expected during Friday’s session due to the Thanksgiving holiday, thin trading volumes could lead to increased price volatility, amplifying potential price swings in either direction.
Key Drivers Supporting Gold Prices
The fear of a global trade war, triggered by US President-elect Donald Trump’s threat to impose tariffs on imports from Canada, Mexico, and China, has intensified demand for gold as a safe-haven asset. Additionally, rising geopolitical risks—such as Russia's threats to deploy hypersonic missiles—further fuel market uncertainty, reinforcing support for gold.
The USD is struggling to maintain recent gains, falling to a two-week low amid declining US Treasury bond yields. The benchmark 10-year US Treasury yield has dropped to its lowest point in two weeks, as markets anticipate a more cautious approach from the Fed in light of fiscal deficit concerns under President Trump's policies. Speculation about a potential rate cut at the Fed's December meeting is also weighing on the USD, with a 70% probability of a 25 basis point reduction. This has kept market participants on edge and limited the dollar’s upside potential.
Technical Analysis: Gold Tests Key Resistance Levels
Gold's break above the $2,649-$2,650 range has triggered a bullish signal. However, the metal faces significant resistance near $2,663-$2,664, aligning with the 50% Fibonacci retracement level of its recent decline. If gold can push through this level, it could target $2,677 (61.8% Fibonacci retracement) and the psychological barrier at $2,700. A decisive break above $2,700 would likely reinforce the bullish outlook.
Support levels are also important to monitor. The $2,650 zone remains immediate support, and a drop below this level could expose $2,633 and $2,620. The critical psychological level at $2,600 holds significant technical importance. A sustained break below $2,600 could open the path toward the 100-day Simple Moving Average (SMA) at $2,573 and the monthly low near $2,537-$2,536.
Momentum Indicators and Outlook
Momentum indicators suggest that gold still has room to rise. The 14-day Relative Strength Index (RSI) is not yet in overbought territory, indicating that there is potential for further gains. The 100-hour Simple Moving Average (SMA) near $2,650 now serves as key support, while the $2,663-$2,664 zone remains a critical resistance point.
Looking ahead, while gold prices retain a bullish bias due to trade war concerns and geopolitical risks, the potential for slower rate cuts by the Fed could limit further upside potential. A sustained move above $2,664 is essential to push prices towards $2,700, while a drop below $2,650 would signal a deeper correction, with potential support zones at $2,600 and beyond.
Market Conditions and Volatility
With no major US economic data releases expected during Friday’s session due to the Thanksgiving holiday, thin trading volumes could lead to increased price volatility, amplifying potential price swings in either direction.