Gold prices (XAU/USD) are facing downward pressure during the early European session on Thursday, as the precious metal appears to have broken its three-day winning streak, which had propelled it to its highest levels since early November. The US Dollar (USD) has gained some strength for the second consecutive day, continuing its recovery from a monthly low. This, combined with stable equity market performance, is playing a crucial role in weighing down the appeal of gold as a safe-haven asset.
However, expectations that the Federal Reserve (Fed) will reduce interest rates twice this year continue to keep US Treasury bond yields in check, which should limit the upside potential of the USD and offer some support to gold’s price. Moreover, the uncertainty surrounding US President Donald Trump’s trade policies, particularly those that may provoke trade conflicts and increase market volatility, is likely to provide a cushion for gold, preventing significant losses. These factors warrant caution before concluding that the upward momentum in gold has fully dissipated.
From a technical standpoint, if gold experiences further declines, it is expected to find solid support in the $2,625-$2,620 range, which marks a key horizontal resistance level now turned support. A deeper sell-off could see gold dropping to the $2,700 level. A decisive break below this point could lead to further declines, with $2,665-$2,662 being the next significant support zone. Beyond that, the $2,627-$2,622 confluence, where the 100-day Exponential Moving Average (EMA) meets a short-term upward trend line, is likely to serve as a critical turning point for short-term traders.
On the flip side, if gold manages to break above the recent swing high near $2,763-$2,764, it could target its all-time high around the $2,790 mark, a level reached in October. A push beyond $2,800 would signal a continuation of the bullish trend, potentially fueling an extended upward movement as the metal continues to benefit from broader economic uncertainties.
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