Gold prices faced heavy selling at the start of the new week and month, dropping to the $2,623-$2,622 range during the Asian session, ending a four-day winning streak. The decline came as demand for the U.S. Dollar (USD) picked up, driven by expectations that U.S. President-elect Donald Trump’s tariff plans could reignite inflationary pressures. This development has raised concerns that the Federal Reserve (Fed) may face limitations in cutting interest rates, contributing to a rise in U.S. Treasury bond yields and boosting the USD.
Despite this pullback in gold, markets are still pricing in a greater chance of the Fed lowering interest rates later this month. Ongoing geopolitical risks, including the Russia-Ukraine conflict and instability in the Middle East, are helping to limit gold’s losses, with the precious metal maintaining its appeal as a safe-haven asset. Traders are also cautious ahead of key U.S. economic data releases later this week, particularly the highly anticipated Nonfarm Payrolls (NFP) report, which will provide insight into the Fed’s future monetary policy and influence USD price dynamics.
From a technical standpoint, gold’s intraday slide below the lower boundary of a nearly one-week-old descending channel could signal a bearish trend. Oscillators on daily and 4-hour charts are showing negative momentum, suggesting that the path of least resistance for gold may be downward. A further drop toward last week’s swing low near $2,605 is a distinct possibility. If gold falls below $2,600, it could test the 100-day Simple Moving Average (SMA) around the $2,575 mark.
On the upside, gold faces immediate resistance around the $2,642-$2,643 range, followed by static resistance near $2,652 and the previous swing high of $2,665. A solid rebound could push gold back toward the $2,700 mark, with potential to extend toward the $2,721-$2,722 zone. A decisive break above this resistance level would signal that the recent corrective decline from gold’s October peak may be over, opening the door for further upward movement.
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