Article by: ETO Markets
Gold's market dynamics are primarily driven by anticipated Federal Reserve rate cuts and heightened geopolitical tensions. The metal has demonstrated remarkable strength, posting a 27% gain year-to-date, its best performance since 2010. Recent US PCE inflation data has bolstered expectations for monetary policy easing in 2025, with increased market confidence in potential rate cuts. However, the US Dollar Index's position above 108.00 presents a notable headwind for the dollar-denominated metal. Political uncertainty surrounding the incoming Trump administration, particularly regarding proposed trade policies including 100% tariffs on BRICS nations, adds complexity to the outlook. Ongoing geopolitical tensions, including developments in the Russia-Ukraine conflict and Middle East situations, continue to support safe-haven demand. Large-scale central bank purchases and institutional interest remain key drivers, though the year-end trading conditions may introduce additional volatility.
The technical landscape for gold reveals a complex interplay of support and resistance levels that warrant careful attention. Currently, the most significant resistance zone is positioned between $…-$…, where both the 20-day and 55-day Moving Averages converge, creating a strong technical barrier. The core resistance level sits at $…, which aligns with the 50.8% Fibonacci retracement level and has historically acted as a pivotal price point. On the support side, immediate attention falls to $…, the recent daily low where buying interest has emerged, followed by crucial support at $… at the 100-day Moving Average. The price action between these levels shows consolidation, with the current price at $… testing the immediate support zone. The Relative Strength Index hovering around … suggests neutral momentum, though the overall structure indicates a slightly bearish bias below the key moving average resistance zone.
