Gold price has continued their upward trend for the third straight day, rising more than 3.40% this week as risk aversion drives demand for safe-haven assets. Currently, XAU/USD is trading at $2,650, reflecting a gain of 0.69%, with buyers targeting the $2,700 level.
The decline in bullion prices towards a two-month low of $2,536 is largely due to investors cashing in profits after President Donald Trump's election win. Concerns that some of his proposals could reignite inflation have led to a surge in US Treasury yields and bolstered the US Dollar.
Despite this decline, bullion prices had previously risen amid escalating tensions in the Russia-Ukraine conflict. On Tuesday, Russian President Vladimir Putin authorized the potential use of nuclear weapons in response to Western actions, while reports indicated that the White House had approved Ukraine's use of American weapons within Russia.
Meanwhile, the US Dollar advanced 0.51% on the day, with the US Dollar Index (DXY)—which measures the currency against six others—reaching 106.69 after hitting a five-day low of 106.11.
Recent comments from Federal Reserve Board Governors Lisa Cook and Michelle Bowman did not provide clarity on the outcome of the upcoming December Federal Open Market Committee (FOMC) meeting. Cook expressed confidence in the Fed's ability to bring inflation down to the 2% target but refrained from indicating support for a rate cut next month. Bowman noted that while there has been "considerable progress" on inflation, it appears to have "stalled in recent months," suggesting that the Fed should proceed with caution. She also indicated that neutral rates may not be as low as some officials had anticipated.
Traders have reduced expectations for a 25 basis point rate cut at the December meeting, with the CME FedWatch Tool now showing a 55% probability of a rate reduction, down from 58% the previous day.
Looking ahead, the US economic calendar includes Initial Jobless Claims, S&P Global Flash PMIs, and the final reading of Consumer Sentiment for November from the University of Michigan.
Gold prices exhibit an upward bias, but buyers need to overcome key resistance levels. If XAU/USD breaks above the 50-day Simple Moving Average (SMA) at $2,658, it could stabilize around the $2,700 mark. A successful breach of this level would expose the November 7 high of $2,710, as well as the psychological resistance at $2,750.
On the other hand, sellers could gain the advantage if the price falls below $2,600. In that scenario, further declines are likely, with the next support level being the 100-day SMA at $2,550. Bears may then target the swing low of $2,536 from November 14, potentially pushing XAU/USD down to $2,500.
The Relative Strength Index (RSI) remains bearish but is approaching the neutral line, suggesting that gold buyers are building short-term momentum.
When considering shares, indices, forex (foreign exchange) and commodities for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss.
Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.
