Article by: ETO Markets
Gold prices are displaying significant volatility, trading near $3,121.86 after retreating from a historic peak of $3,167.68 earlier in the month. This price action is occurring amidst a substantial escalation in US-China trade hostilities, marked by reciprocal tariff hikes reaching unprecedented levels, which is fundamentally shaping market dynamics. Potential headwinds exist from this week's critical US economic data releases; the Consumer Price Index (CPI) and Federal Reserve meeting minutes could exert downward pressure on gold if they indicate persistent inflation, possibly tempering expectations for imminent rate cuts. Nevertheless, robust underlying support for the precious metal persists, driven by strong safe-haven demand as investors navigate the uncertainties of a potential trade war and its global economic implications. A generally softer US Dollar, continued gold accumulation by central banks, and significant inflows into gold-backed Exchange Traded Funds (ETFs) further buttress gold's appeal. Market sentiment appears cautiously constructive towards gold, recognising its role as a hedge against escalating geopolitical and economic risks, though participants remain attentive ahead of the key US data points.
Technically, Gold (XAU/USD) is consolidating around the $… mark following its pullback from the recent $… high. Immediate resistance appears near the upper Bollinger Band, currently sited at $…, with the cycle peak of $… representing the next significant barrier. On the downside, initial support can be identified around the 20-day Simple Moving Average (SMA), which coincides with the middle Bollinger Band near $…. A failure to hold this level could see prices test a more substantial support zone defined by the lower Bollinger Band at $… and the 50-day SMA around $…, an area that has provided a floor during recent pullbacks. Further support may reside near the 55-day Exponential Moving Average (EMA) at approximately $…. While the broader uptrend remains intact, the negative MACD histogram (-9.53) indicates weakening upward momentum in the short term, and the elevated Average True Range (ATR) of 61.68 suggests continued high volatility is probable in the coming sessions.
