Gold Eyes Record Peak on USD Decline

Image Credit: FXSTREET

Gold (XAU/USD) maintains its bullish momentum ahead of Friday’s European session, reaching a new multi-month high around $2,778. Comments from US President Donald Trump, expressing a preference to avoid tariffs on China, have helped ease trade-war fears and concerns over inflation.

This has contributed to a decline in US Treasury bond yields, fueled by Trump's push for lower rates, which, in turn, has weakened the US Dollar (USD) to a one-month low, boosting demand for gold as a safe-haven asset.  

Additionally, worries about the potential economic repercussions of Trump’s protectionist policies are driving further interest in gold. However, a generally positive sentiment in equity markets and slightly overbought short-term technical indicators might deter traders from aggressively building on gold's bullish trajectory.

Despite this, gold remains poised for a fourth consecutive weekly gain as traders anticipate the release of flash global PMI data for short-term trading opportunities.  

From a technical standpoint, Thursday’s dip-buying and subsequent recovery confirm a bullish breakout above the $2,720-$2,725 resistance zone. However, the Relative Strength Index (RSI) on the daily chart is approaching overbought levels, suggesting the need for some consolidation or a minor pullback before gold extends its upward move.

The next major resistance lies near the all-time high around $2,790, which could act as a significant barrier to further gains.

On the downside, immediate support is located near the $2,760-$2,758 range. A break below this level could lead to a retest of the overnight low near $2,736-$2,735.

Any deeper declines would likely attract buyers around the $2,725-$2,720 zone, which now serves as a critical support level. A decisive breach of this support could shift the outlook to bearish, opening the door for more significant losses.

Paraphrasing text from "FXSTREET" all rights reserved by the original author.