Gold is Making Gains on the Back of Weaker USD and Geopolitical Tensions, Puts Key Resistance Levels in Its Sights
Gold prices recovered from a one-week low, supported by a weaker US dollar and increasing geopolitical tensions that bolstered safe-haven demand. While recent improvements in US jobs data scaled back expectations for imminent Federal Reserve rate cuts, gold was still near enough to snap a two-day losing streak. Investors are cautious as they look ahead to pivotal US-China trade negotiations, and constant strife and uncertainties continue to support the precious metal’s appeal. Technically, gold is met with resistance around $3,350 to $3,380, but has the potential to probe higher levels if it can hold gains above these points. KEY LOOKOUTS • The result of the high-stakes London negotiations has the potential to have a significant impact on market sentiment and gold’s safe-haven demand. • Fed rate cut expectations changes will influence gold’s price action, particularly because it is very sensitive to interest rate movements. • Heightening tensions in conflicts like the Russia-Ukraine conflict continue to uphold gold as an asset that provides refuge. • Be on the lookout for important support levels at $3,283–$3,282 and resistance levels at $3,352–$3,378, which will guide the near-term direction of gold. Gold prices have continued to exhibit strength in the face of a complicated blend of factors, recovering from a recent low as the US dollar fell and geopolitical tensions continued. While the strong US employment report has dampened hopes of near-term Federal Reserve rate cuts, the gold safe-haven demand continues unabated due to sustained uncertainties such as ongoing escalations and impending US-China trade talks. Market players are monitoring closely key technical levels that will either cap further losses or clear the way for fresh bullish drives towards significant resistance areas around $3,350 and higher. Gold prices regained ground from a one-week low due to a weaker US dollar and increasing geopolitical tensions. While solid US jobs data undermined hopes of a rate cut, safe-haven demand and the looming US-China trade negotiations keep the outlook for gold cautiously positive. • Gold price rebounded from a one-week low, supported by a generally softer US dollar. • Geopolitical tensions, such as the Russia-Ukraine war, remain supportive of gold’s safe-haven demand. • Friday’s US Nonfarm Payrolls report revealed firmer-than-expected employment growth, cooling bets on any near-term Fed rate cuts. • The US dollar reversed prior gains following the NFP, assisting gold in breaking a two-day losing streak. • Investors tread with caution as important US-China trade talks are set to take place in London. • Technical support of gold is at the $3,283–$3,282 level, while resistance remains around $3,352–$3,378. • A sustained break above resistance has the potential to drive gold prices up to $3,400 and higher to the $3,425–$3,430 area. Gold prices have received fresh support as the US currency lost ground at the beginning of the week, allowing the precious metal to recoup some of its recent losses. The current geopolitical uncertainty, especially the halted peace negotiations in the conflict between Russia and Ukraine, has triggered increased demand for safe-haven assets such as gold. Investors, in the meantime, continue to remain cautious ahead of critical US-China trade talks that will be held in London and may carry far-reaching implications for global economic stability and market sentiment. XAU/USD DAILY PRICE CHART CHART SOURCE: TradingView The US labor market figures published last Friday revealed more-than-anticipated growth in jobs, which has cooled down prospects for near-term Federal Reserve interest rate reductions. Nevertheless, there are still ongoing concerns regarding the financial well-being of the US government and overall economy, which continue to underpin gold’s appeal. With uncertainties being on-going, market participants are weighing these against each other while closely observing developments in trade negotiations and geopolitical developments that would continue to weigh on gold’s safe-haven demand. TECHNICAL ANALYSIS Gold demonstrated strength by remaining above the pivotal $3,300 level and the 200-period Simple Moving Average (SMA) on the 4-hour chart, indicating near-term support. A clear break below the $3,283–$3,282 zone would set the stage for additional drops towards the May 29 swing low at about $3,245 and possibly the $3,200 zone. On the flip side, gold encounters sturdy resistance in the $3,352–$3,378 zone, where sellers could step in to limit gains. But a break above this resistance area could initiate a bullish momentum change, possibly propelling prices towards the $3,400 psychological level and higher, towards the $3,425–$3,430 area. FORECAST In the short term, gold may come under downward pressure if it cannot sustain above the important support level of $3,283. A decline below this level could step up selling, leading prices to the $3,245–$3,246 region and possibly test the $3,200 level. This bears scenario may be initiated by more robust US dollar momentum or easing geopolitical tensions, lowering gold’s safe-haven status. On the other hand, on the positive side, a continuous rally past the $3,352–$3,378 resistance area may draw in new buying interest and ignite a short-covering rally. Such a rally will allow gold to test the $3,400 psychological figure and extend further gains to the $3,425–$3,430 region. If the bullish trend continues, gold may even touch its record high at around $3,500, particularly if geopolitical tensions rise or US interest rate cut hopes grow stronger.