Market Analysis

Gold prices (XAU/USD) are drawing interest from dip-buyers near the $2,379-$2,378 range on Wednesday and have risen to a new daily high as the European session approaches. The release of softer US economic data has indicated that the US economy is slowing more rapidly than anticipated. This has sparked speculation about potential larger interest rate cuts by the Federal Reserve (Fed), providing a boost to the non-yielding gold.

Additionally, worries about an economic slowdown in China and escalating geopolitical tensions in the Middle East are offering further support to gold as a safe-haven asset. However, a notable increase in US Dollar (USD) demand, driven by a recovery in US Treasury bond yields and a generally positive risk sentiment, might limit significant gains for XAU/USD.

Technical Analysis: Gold's Price Struggles to Break Above $2,400; 50-Day SMA Provides Crucial Support

From a technical standpoint, any decline in gold prices may find support around the 50-day Simple Moving Average (SMA) near the $2,368-$2,367 region. This is followed by last week’s swing low near $2,353-$2,352 and the $2,344 area, which aligns with the 100-day SMA. A sustained dip below this level could signal a new bearish trend, potentially leading to deeper losses. With oscillators on the daily chart showing early signs of negative momentum, the price could accelerate downward towards the $2,300 level.

Conversely, if gold recovers and moves above the $2,400 mark, resistance is likely to emerge around the recent high of $2,418. Further buying could push gold beyond the $2,430 level, targeting the next resistance zone at $2,448-$2,450. Momentum could extend towards $2,468-$2,469, approaching the all-time high of $2,483-$2,484 reached in July. Bulls may then aim to breach the $2,500 psychological level, which, if surpassed decisively, could set the stage for further gains in the near term.

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