Article by: ETO Markets
Gold prices are exhibiting notable volatility, currently trading around $… after an earlier attempt to push above the $3400 mark was met with selling pressure. The market is navigating a complex environment shaped by persistent geopolitical tensions and a hawkish stance from major central banks. Factors exerting downward pressure on gold include the US Federal Reserve's recent decision to maintain interest rates and its cautious commentary on future rate cuts, which lends some strength to the US dollar, typically a headwind for the precious metal. Additionally, a generally positive risk sentiment in equity markets, partly buoyed by announcements of potential trade deals by US President Donald Trump, is currently limiting gold's immediate upside appeal. However, significant underlying support for gold persists. Ongoing geopolitical instability, including the Russia-Ukraine conflict, heightened tensions in the Middle East involving Yemen, and continuing US-China trade frictions with President Trump reaffirming substantial tariffs, all bolster gold's traditional safe-haven status. Furthermore, global central banks are continuing their robust gold purchasing trend as part of de-dollarisation strategies, and persistent global inflation concerns encourage investors to seek gold as a reliable hedge. Market sentiment appears cautious and somewhat mixed.
From a technical perspective, gold (XAU/USD) is currently consolidating around the $… mark, after retreating from an intraday high of $…. The price action shows a recent formation of lower daily highs from the $… peak earlier in the week, suggesting some potential weakening in the immediate bullish momentum. The failure to sustain gains above $… warrants caution. An immediate critical support level is observed in the $…-$… zone, which aligns with the day's low of $…. A convincing break below this support could signal further downside, initially targeting the 9-day Exponential Moving Average at approximately $…. Should this level fail to hold, the 10-day Simple Moving Average near $…, followed by the 20-day SMA at $…, would serve as subsequent support areas. On the upside, initial resistance is presented by the day's high at $…, with a more significant barrier at the week's high around $…. While the 14-day Relative Strength Index (RSI_14) at 59.32 indicates some residual positive momentum, the inability to breach recent highs suggests a cautious outlook is prudent.
