Forex Trading Tools and Services

Commodities Gold

Gold Price Rises on Fresh USD Selling: Market Analysis

  • BY
  • January 20, 2025
  • 0 Comments

Gold prices have started the week on a positive note, supported by renewed selling pressure on the US Dollar amid growing expectations of two Federal Reserve interest rate cuts this year. The yellow metal, considered a hedge against inflation and economic uncertainty, finds support around the $2,700 mark, with technical levels indicating potential resistance near $2,715 and $2,724-2,725. On the downside, any dips are likely to attract buyers, with significant support zones at $2,662 and $2,635. Although a strengthening geopolitical sentiment and strong equity market mood might put a lid on gains, the markets are on their toes before important events such as US President-elect Donald Trump’s inaugural speech that might shape inflation expectations and direction of Federal Reserve policy. KEY LOOKOUTS • Markets are expecting two rate cuts from the Federal Reserve this year that may soften the USD and cause gold prices to soar further as an asset that finds safe haven. • Gold is resisting at $2,715 and $2,725; it could rally to $2,745 if oscillators on the daily chart continue to stay bullish. • Strong support is seen between $2,662 and $2,635; any significant decline below these levels may attract a bearish trend, thus cautious investor attention. • Donald Trump’s economic policies and easing tensions in the Middle East are still important factors, which may impact both inflation expectations and safe-haven demand for gold. Prices for gold still seem buoyant, lifted by expectations that there would be two Federal Reserve rate cuts this year, which has weakened the US Dollar and bolstered safe-haven demand. From a technical perspective, the yellow metal faces resistances near $2,715 and $2,725, and it may climb towards $2,745 if bullish momentum continues. Key support levels are likely to attract dip-buyers at $2,662 and $2,635, capping a deeper decline. While geopolitical tensions ease and US President-elect Donald Trump’s proposed policies are likely to have a bearing on inflation and the Federal Reserve’s response, they remain essential in forming the gold market view. A softer US Dollar supports gold prices, with Federal Reserve rate cuts being anticipated. Strong support comes in at $2,662, and $2,715 remains the resistance point. • Speculation about Federal Reserve rate cuts has softened the USD, increasing the appeal of gold as a safe-haven asset. • Gold faces significant resistance at $2,715 and $2,724-2,725, with potential to reach $2,745 if bullish momentum continues. • Dip-buying activity is expected near $2,662 and $2,635, offering a safety net for gold’s price movement. • Daily chart oscillators are seen positive, which might pave the way for potential moves higher, either toward $2,760 or even higher. • Expectation of policies of Donald Trump and creeping inflationary pressures could definitely exert an influence on investors’ outlook in increasing demand for gold. • Easing tensions in the Middle East and a stable equity market are likely to cap the short term gains in gold. • Aiming to challenge its all-time high of $2,790, gold remains a focal point for investors seeking stability amid uncertain global events. Gold prices started the week on a modest note, supported by renewed selling in the US Dollar amid growing expectations of Federal Reserve rate cuts this year. The prospect of lower interest rates has weakened the greenback, making gold a more attractive safe-haven asset for investors. Technically, gold faces resistance near the $2,715 and $2,724 levels, while support zones at $2,662 and $2,635 continue to attract dip-buying activity. Positive momentum in daily chart oscillators suggests the potential for further gains, with the yellow metal eyeing the $2,745 intermediate hurdle and potentially moving towards its all-time high of $2,790. XAU/USD Daily Price Chart. Source: TradingView, Prepared By ELLYANA However, geopolitical and economic factors could influence gold’s trajectory. The easing of tensions in the Middle East and a generally positive tone in equity markets may cap gold’s upside, as investors show less interest in risk-averse assets. Meanwhile, anticipation of US President-elect Donald Trump’s policies and their potential impact on inflation and monetary policy add another layer of uncertainty to the market. These dynamics, allied with key technical levels, place gold’s performance high on the agendas of traders and investors in the coming weeks. TECHNICAL ANALYSIS From a technical analysis viewpoint, gold prices are approaching levels that could go a long way in deciding the near-term trend. The two zones of resistance at $2,715 and $2,724-$2,725 remain crucial. Should these break out, it’s likely to clear the way toward $2,745 and further toward the range of $2,760-$2,762. The daily chart oscillators are still accumulating positive momentum, sustaining the bullish sentiment. On the downside, there is immediate support between $2,700 and $2,690, but a stronger floor around $2,662-$2,635 aligns with a short-term ascending trendline and the 100-day EMA. If these levels fail to hold for an extended period, it would suggest a deeper pullback toward the $2,620-$2,615 confluence zone.  FORECAST Gold prices are poised for further gains as technical indicators maintain a bullish outlook. A sustained break above the $2,715 resistance level could open the door to test the $2,724-$2,725 region, a one-month high. Beyond this, the next upside targets lie at $2,745, with an eventual move toward the $2,760-$2,762 area if positive momentum persists. Strong demand from dip-buyers and even more favorable macroeconomic conditions, for example, if the Federal Reserve is expected to cut rates again, could power the rally higher. In the longer term, gold may well try to make a new high at $2,790 in case geopolitical tensions or inflationary concerns flare again. On the downside, major support lies around $2,700 and then $2,690, and a deeper cushion around $2,662-$2,635. A breakdown of these levels would likely lead to additional selling that would drive the price down toward $2,620-$2,615. Here, several technical factors including a short-term ascending trendline and the 100-day EMA offer good support. More significant corrections for gold could occur in the event of a shift in broader market sentiment or a strengthening US Dollar due to unexpected economic data or Federal Reserve commentary. However, heavy buying

Read More
Commodities Gold

Gold Bulls Face Key Test at $2,708 Resistance as Inflation Data Boosts Rate Cut Speculation

  • BY
  • January 16, 2025
  • 0 Comments

Gold prices extended their recovery, rising above $2,700 and eyeing further gains, fueled by mixed US CPI data that increased expectations for a Federal Reserve rate cut by June. While headline CPI accelerated, core inflation rose more slowly than expected, boosting the probability of a 25 basis point rate reduction, with the CME FedWatch tool showing a 63.8% chance of lower rates after the June meeting. This drove gold’s ascent to a pivotal level of $2,708, with potential resistance at $2,721 and the all-time high of $2,790 looming ahead. The US 10-year Treasury yield remained in a downward trend, bolstering the positive sentiment for gold. But at $2,708, it is a test of technical significance that may result in a correction if the Relative Strength Index shows it is overheating. A close above $2,721 will put gold into a position for a run to its all-time high. Downside support rests at $2,671, $2,648, and $2,640. KEY LOOKOUTS • Even higher market expectations for a Fed rate cut by June may continue to drive gold prices higher as long as inflation moves lower. • Gold needs to clear some tough resistance at $2,708 and $2,721 to potentially drive prices toward the all-time high of $2,790 • Fast RSI moves could be an overheat sign, and gold prices might experience a short-term correction if momentum declines near major resistance zones. • The US Treasury yields have been trending lower, currently below 4.70%, and are likely to further propel gold upward since lower yields decrease the opportunity costs of holding bullion. The gold is near critical resistances at $2,708 and $2,721. If it breaks out above those levels, then it could continue pushing prices up toward the all-time high of $2,790. Additionally, growing market expectations for a Fed rate cut by June will continue to support the prices if inflation remains subdued. However, the sharp rise in the RSI indicates overheating and a short-term correction if momentum stalls. Moreover, the continued decline in US Treasury yields, which are currently below 4.70%, will further provide upside for gold as lower yields reduce opportunity costs for holding bullion. A rise in the hopes of a Fed rate cut by June supports the gold prices and resistance at $2,708 and $2,721. A breakout might target $2,790; however, overbought RSI and declining Treasury yields bring caution. • Growing market expectation for a 25 basis point rate cut by June supports gold’s upside. • US CPI: Core inflation grows at a slower rate, increasing the chances of Fed rate cut. • Critical resistance sits at $2,708 and $2,721; prices exceeding these levels is a possible threat for pushing up to its highs at $2,790 • An explosive rising RSI often spells overheating conditions that a near-term selling could be inevitable should the move get stuck up • Treasury yields falling well under 4.70% decrease opportunity costs, aiding the rise in gold; bearish thesis from this arena ruled out by technical • Buy-support levels arrive around $2,671,$ 2,648, $2,640. • The upcoming US economic data, such as retail sales and jobless claims, will be critical in determining the market sentiment and direction of gold prices. Gold prices are on the upswing due to increasing prospects of a rate cut by the Federal Reserve by June, following mixed US CPI data. Although the headline inflation has accelerated, core inflation increased at a slower pace, which has increased the chances of a 25 basis point rate cut. The market is now pricing in a 63.8% chance of lower rates after the June meeting, which has fueled demand for gold as a safe haven. Gold is facing key resistance at $2,708 and $2,721; breaking these levels could see it targeting the all-time high of $2,790. XAU/USD Daily Price Chart Sources: TradingView, prepared by ELLYANA Technical indicators are hinting at being cautious, but the Relative Strength Index (RSI) reflects rapid growth here, which would mean overheating and a good chance of seeing a short-term correction. On the downside, one finds support lines at $2,671, $2,648, and $2,640. Yet, falling US Treasury yields, at this point less than 4.70%, continue to give gold prices their boost since falling yields lower the opportunity cost for holding non-yielding assets, such as bullion. Upcoming US economic data in the form of retail sales and jobless claims, for example, could decide the course of gold to maintain its bullish or pull back. TECHNICAL ANALYSIS The firm currently remains in an uptrend with prices above $2,700 and is seen making its way toward significant resistance at $2,708. A crack of this level will push gold to $2,721 and all-time high of $2,790. However, the Relative Strength Index is increasing rapidly, showing more and more bullish momentum, but also at a risk of overheating and short-term correction. Key support levels are at $2,671 (trendline), $2,648 (55-day SMA), and $2,640 (100-day SMA). If gold fails to break through resistance, a pullback towards these support zones could occur, while strong breaks could extend the rally further.  FORECAST Gold is now bullish, with an excellent thrust above $2,700. If the price breaks above $2,708, then it should move into $2,721, which could hit $2,790 as the all-time high. Continued expectations for a June Fed rate cut and falling Treasury yields will push gold even higher. When gold clears $2,721, then it can open the route to a rally into $2,790 or higher. If gold runs into resistance and cannot break above $2,708, there is a good chance of a pullback, especially if the RSI is showing signs of overheating. In this case, key support levels are at $2,671 (trendline), $2,648 (55-day SMA), and $2,640 (100-day SMA). A failure to hold above these levels could send the price lower, potentially testing $2,640 or lower. The risk of a correction is higher if momentum slows or if unfavorable economic data impacts sentiment.

Read More