Due to flight to safety flows and a declining USD, intraday gold buyers dominate the market
Gold prices (XAU/USD) climbed to a new multi-day high during the European session on Friday, extending this week's recovery from the $2,600 range. Concerns about the impact of US President-elect Donald Trump's proposed tariffs on global economic growth, along with ongoing geopolitical tensions from the prolonged Russia-Ukraine conflict, continue to drive safe-haven demand for gold.
At the same time, expectations of another interest rate cut by the Federal Reserve (Fed) in December have kept US Treasury yields subdued, pushing the US Dollar (USD) to its lowest level in over two weeks. This further supports the non-yielding yellow metal. However, inflationary policies under Trump, coupled with signs of stalled progress in reducing US inflation in October, could limit the Fed's ability to ease rates further, potentially capping gains for XAU/USD.
Gold Price Needs to Clear Key Levels for Sustained Bullish Momentum
From a technical standpoint, gold's intraday breakout above the $2,649-$2,650 resistance zone — defined by the 100-hour Simple Moving Average (SMA) and the 38.2% Fibonacci retracement level of the recent decline — acted as a catalyst for buyers. However, the upward momentum has stalled near the $2,663-$2,664 area, aligning with the 50% Fibonacci retracement level, which remains a critical barrier. A sustained move beyond this level could open the door for further gains towards $2,677 (61.8% Fibo. level) and eventually the psychological $2,700 mark.
On the downside, the $2,650 breakout point now serves as immediate support. A drop below this level could see gold prices retreat to $2,633, corresponding to the 23.6% Fibonacci level and the overnight low near $2,620. Deeper losses may target the monthly trough at $2,605, with further selling pressure potentially driving prices towards the 100-day SMA at $2,573 and the monthly low in the $2,537-$2,536 region.
Paraphrasing text from "FX Streets" all rights reserved by the original author.
