Gold continues its impressive rally, edging closer to its all-time high of $2,790, as it trades at $2,772, marking a 0.60% gain. The precious metal’s climb is being fueled by a combination of global and domestic factors, with ongoing economic uncertainties driving investor demand for safe-haven assets. However, recent comments from former President Donald Trump have added complexity to the market sentiment, as he indicated a potential delay in imposing new tariffs on Chinese goods, surprising traders and contributing to a sense of cautious optimism.
Despite these positive remarks from Trump, market sentiment remains subdued due to mixed U.S. economic data released on Friday. S&P Global’s report indicated an improvement in U.S. manufacturing activity in December, sparking some optimism. However, the University of Michigan’s final survey for January revealed a decline in consumer sentiment, raising concerns about the broader economic outlook. These conflicting signals are keeping investors on edge, but gold continues to shine as a strong performer in the face of economic uncertainty.
U.S. Dollar Weakens Amid Trump’s Comments and Mixed Economic Data
The U.S. Dollar Index (DXY) has weakened, dropping 0.62% to 107.44. This decline follows former President Trump’s remarks at the World Economic Forum, where he called for lower interest rates, further pressuring the Greenback. As the dollar is set to finish the week with a notable loss of 1.77%, its weakness has provided additional support for gold, despite higher real yields.
The yield on the 10-year Treasury Inflation-Protected Securities (TIPS) has risen to 2.23%, while the U.S. 10-year Treasury bond yield has slipped two basis points to 4.625%. The mixed economic data from the U.S. is further complicating the outlook. While the S&P Global Manufacturing PMI rose to 50.1, indicating slight growth, the Services PMI dropped to 52.8, falling short of expectations. Meanwhile, consumer sentiment, as measured by the University of Michigan survey, fell to 71.1, below forecasts. On a positive note, existing home sales increased by 2.2% in December, reflecting resilience in the housing market.
Gold Technical Analysis
Gold (XAU/USD) closed at $2,770.88, experiencing a slight pullback from its recent high of $2,785.74. The price remains supported by key technical levels, particularly the support at $2,763.79, which aligns with the ongoing uptrend. The 50-period exponential moving average (EMA) at $2,750.36 further supports this bullish momentum.
A sustained hold above the support level of $2,763.79 could lead to another rally toward resistance levels at $2,785.74 and $2,797.09. However, a break below $2,763.79 could expose gold to further downside, with the next support levels at $2,748.76 and $2,736.41. As long as gold remains above the upward trendline and the 50 EMA support zone, the overall bullish trend remains intact.
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