Article by: ETO Markets
Gold prices fell to the $…-$… range during the Asian session, snapping a four-day increase streak as the US Dollar strengthened amid renewed demand. Expectations that President-elect Donald Trump's proposed tariffs might fuel inflationary pressures and constrain the Federal Reserve's ability to cut interest rates pushed US Treasury yields higher, providing support for the USD, which rebounded from a three-week low. The stronger USD weighed on non-yielding assets like gold, prompting heavy selling.
However, gold's losses were constrained by persistent geopolitical risks stemming from the Russia-Ukraine conflict and tensions in the Middle East, alongside market expectations that the Federal Reserve may still lower borrowing costs later this month. This cautious optimism limited bearish momentum as traders awaited critical US economic data, particularly the Nonfarm Payrolls report, which is expected to provide fresh insights into the Fed's rate policy. These developments will likely play a pivotal role in shaping USD dynamics and determining the next directional move for gold.
From a technical perspective, gold prices face a bearish outlook if they break below the 38.2% Fibonacci level at $…. This could lead to a drop towards last week's swing low at $…, with further selling pressure below $… potentially exposing the 100-day SMA near $…. Conversely, the 50% Fibonacci level serves as a critical pivot point. If buying momentum continues, gold could rise to the $… area (61.8% Fibonacci level), and a sustained rally beyond this hurdle could push prices past $…. The $…-$… zone would then act as a key level for confirming a reversal of the recent corrective decline from October's all-time high.
