Gold Faces Mild Downturn Amid Slight USD Strength

Image Credit: FXSTREET

Gold (XAU/USD) maintains a negative bias in the early European session, although there is a lack of strong selling pressure, keeping it near its highest level since early November. The US Dollar (USD) is looking to build on its recovery from a monthly low on Wednesday, supported by an optimistic sentiment in equity markets, which dampens demand for the safe-haven asset.

However, expectations of the Federal Reserve cutting rates twice this year help cap US Treasury bond yields and the USD, offering some support to gold. Additionally, uncertainty over US President Trump's tariff plans, which could spark trade wars and increase market volatility, limits the downside risk for XAU/USD, making it too early to confirm the end of its one-month uptrend.

From a technical standpoint, any potential decline is likely to find support near the $2,625-2,620 level, a key resistance-turned-support area. A further drop could push gold to $2,700, and if this level is broken, a deeper decline toward $2,665-2,662 is possible. The $2,627-2,622 zone, which includes the 100-day EMA and an ascending trend line, will be a key point for short-term traders.

On the upside, the recent high of $2,763-2,764 could act as resistance. If gold breaks above this level, it may target the all-time high around $2,790, followed by the $2,800 level, which, if surpassed, would signal a continuation of the recent bullish trend.

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