Gold steady above $2,700 on USD weakness and market anticipation
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Gold (XAU/USD) continues its upward trajectory, holding gains above $2,700 as renewed selling pressure on the US Dollar fuels demand for the non-yielding asset. The metal’s resilience comes amidst mixed macroeconomic signals and a cautious market tone ahead of President-elect Donald Trump’s inauguration.
Market dynamics and influences
The US Dollar remains under pressure following bets that the Federal Reserve could implement two rate cuts this year. This sentiment, alongside easing tensions in the Middle East and optimism in equity markets, limits significant upside for Gold while supporting its safe-haven appeal.
Last week’s US Producer Price Index (PPI) and Consumer Price Index (CPI) data revealed easing inflationary pressures in December.
Fed Governor Christopher Waller’s remarks about potential faster-than-expected rate cuts further bolstered expectations of a dovish Federal Reserve stance.
This narrative strengthens Gold’s attractiveness, particularly against the backdrop of subdued USD performance.
Meanwhile, the market awaits Trump’s inaugural address, with speculation surrounding potential protectionist policies that could spur inflation. This possibility suggests a complex interplay: while inflationary pressures may support Gold, expectations of a Fed pause in rate cuts could act as a counterbalance.
Technical analysis
Resistance levels
Immediate resistance is seen near $2,715, with the $2,724-$2,725 zone marking the next significant barrier.
Beyond this, a move toward $2,745 is plausible, with the ultimate target being the all-time high near $2,790 set in October 2024.
Support levels
The $2,700-$2,690 region serves as a critical support zone. A sustained dip below this could trigger further declines toward $2,662-$2,660.
Deeper retracements might target the $2,635 level, with $2,620-$2,615 acting as a confluence of trend-line support and the 100-day Exponential Moving Average (EMA.)
Market sentiment and outlook
The Israel-Hamas ceasefire deal and speculation about Trump’s potential diplomatic efforts with Russia add to the broader risk-on sentiment, limiting deeper declines in Gold. However, traders remain cautious, opting to wait for clearer signals from Trump’s policy announcements.
With technical indicators on the daily chart suggesting bullish momentum, Gold’s immediate outlook remains tilted to the upside.
Resistance near $2,715 and $2,725 will be pivotal for determining whether the metal can extend its gains toward higher targets.
Conversely, the $2,700 support zone will be closely watched as a gauge of market resilience.
Market dynamics and influences
The US Dollar remains under pressure following bets that the Federal Reserve could implement two rate cuts this year. This sentiment, alongside easing tensions in the Middle East and optimism in equity markets, limits significant upside for Gold while supporting its safe-haven appeal.
Last week’s US Producer Price Index (PPI) and Consumer Price Index (CPI) data revealed easing inflationary pressures in December.
Fed Governor Christopher Waller’s remarks about potential faster-than-expected rate cuts further bolstered expectations of a dovish Federal Reserve stance.
This narrative strengthens Gold’s attractiveness, particularly against the backdrop of subdued USD performance.
Meanwhile, the market awaits Trump’s inaugural address, with speculation surrounding potential protectionist policies that could spur inflation. This possibility suggests a complex interplay: while inflationary pressures may support Gold, expectations of a Fed pause in rate cuts could act as a counterbalance.
Technical analysis
Resistance levels
Immediate resistance is seen near $2,715, with the $2,724-$2,725 zone marking the next significant barrier.
Beyond this, a move toward $2,745 is plausible, with the ultimate target being the all-time high near $2,790 set in October 2024.
Support levels
The $2,700-$2,690 region serves as a critical support zone. A sustained dip below this could trigger further declines toward $2,662-$2,660.
Deeper retracements might target the $2,635 level, with $2,620-$2,615 acting as a confluence of trend-line support and the 100-day Exponential Moving Average (EMA.)
Market sentiment and outlook
The Israel-Hamas ceasefire deal and speculation about Trump’s potential diplomatic efforts with Russia add to the broader risk-on sentiment, limiting deeper declines in Gold. However, traders remain cautious, opting to wait for clearer signals from Trump’s policy announcements.
With technical indicators on the daily chart suggesting bullish momentum, Gold’s immediate outlook remains tilted to the upside.
Resistance near $2,715 and $2,725 will be pivotal for determining whether the metal can extend its gains toward higher targets.
Conversely, the $2,700 support zone will be closely watched as a gauge of market resilience.