Gold is navigating a critical juncture, finding support at $2,605.26 per ounce and rebounding over the past two sessions. Technical indicators point to potential upside momentum, with key resistance levels in sight. However, the market remains influenced by economic uncertainty, amplified by Donald Trump's proposed tariffs on Canada, Mexico, and China, which have bolstered the dollar and tempered Gold's safe-haven appeal. Despite recent volatility, Gold's impressive 25% gain this year underscores its enduring strength as investors await further economic cues.
Overview
Gold is navigating a critical juncture, finding support at $2,605.26 per ounce and rebounding over the past two sessions. Technical indicators point to potential upside momentum, with key resistance levels in sight. However, the market remains influenced by economic uncertainty, amplified by Donald Trump's proposed tariffs on Canada, Mexico, and China, which have bolstered the dollar and tempered Gold's safe-haven appeal. Despite recent volatility, Gold's impressive 25% gain this year underscores its enduring strength as investors await further economic cues.
Key Economic Events
Wednesday 2:30 am (GMT+2) - Australia: CPI y/y (AUD)
Wednesday 3:00 am (GMT+2) - New Zealand: Official Cash Rate (NZD)
Wednesday 15:30 (GMT+2) - USA: Unemployment Claims (USD)
Wednesday 17:00 (GMT+2) - USA: Core PCE Price Index m/m (USD)
Thursday All Day - Europe: German Prelim CPI m/m (EUR)
Friday 15:30 (GMT+2) - Canada: GDP m/m (CAD)
Saturday 3:30 am (GMT+2) - China: Manufacturing PMI (CNY)
Technical Analysis
Gold experienced a sharp decline on Monday, finding support at $2,605.26 per troy ounce, which coincided with the 50-period Smoothed Moving Average (SMMA). However, as of this writing, the precious metal has bounced off the lows for the second consecutive day. A decisive breach of the swing high at $2,721.36 could serve as a catalyst, allowing Gold to potentially establish new all-time highs.
Key technical indicators, including the 50-period SMMA and the Momentum Oscillator, support Gold's bullish outlook. Specifically, the price remains firmly above the 50-period SMMA, indicating continued upward momentum, while the Momentum Oscillator has risen above the critical level of 100. Conversely, the Relative Strength Index (RSI) remains below 50, sending mixed signals.
Potential Upside Targets
Should the bulls maintain market control, traders may direct their attention toward the four potential resistance levels below:
2665.73: The initial resistance is 2665.73, which represents the weekly Pivot Point, PP, calculated using the standard methodology.
2721.36: The second price target is identified at 2721.36, corresponding to the swing high from November 24.
2789.99: The third target is established at 2789.99, aligning with the all-time high marked on October 31.
2903.69: An additional price target is estimated at 2903.69, which corresponds to the 261.8% Fibonacci Extension drawn from the swing high, 2721.36, to the swing low, 2605.26.
Potential Downside Targets
Should the sellers take market control, traders may consider the four potential support levels listed below:
2605.26: The first level of support is determined at 2605.26, representing a swing low from November 25.
2536.79: The second support level is identified at 2536.79, reflecting the daily low marked on November 14.
2467.03: The third support level is seen at 2467.03, corresponding to the weekly support, S3, calculated using the standard Pivot Points methodology.
2425.33: An additional downward target is observed at 2425.33, corresponding to the 423.6% Fibonacci Extension drawn from the swing low, 2643.05, to the swing high, 2710.33.
Fundamentals
Gold steadied at $2,605 an ounce after a 4% drop, as Donald Trump's proposed tariffs on Canada, Mexico, and China strengthened the dollar, reducing Gold's appeal. A recently approved cease-fire in the Middle East further dampened demand for the metal's safe-haven qualities. Despite the pullback, Gold remains up over 25% this year, driven by central-bank purchases and the Federal Reserve's pivot to rate cuts. Investors are now awaiting key US economic data to gauge the Fed's future policy direction.
Conclusion
In conclusion, Gold's current trajectory reflects a delicate balance between bullish technical signals and broader market uncertainties. With strong support at $2,605.26 and potential for further gains above $2,721.36, the metal could see new highs if upward momentum persists. However, external factors such as Trump's tariff policies, a stronger dollar, and mixed economic signals continue to influence market sentiment. As Gold holds its impressive 25% annual gain, upcoming economic events will play a critical role in shaping its next move.