Gold prices remained constrained below $2,700 early Friday as traders await the release of the University of Michigan’s Consumer Sentiment data. Meanwhile, the U.S. Dollar has stabilized alongside Treasury bond yields, as markets digest Donald Trump’s re-election victory and the Federal Reserve’s recent rate cut.
Gold Price Trends Amid Trump Win and Fed Decisions
Gold has shown mixed movement over the past few days, fluctuating within key Fibonacci levels and major daily averages. After rebounding from a sharp, Trump-driven 3% decline on Wednesday, gold prices turned downward again on Thursday as the U.S. Dollar regained momentum amidst a pause in the bond yield slide, ahead of the Consumer Sentiment report.
During early Friday’s Asian trading, gold consolidated around $2,700 as investors processed recent market volatility. Trump’s re-election, signaling continuity in policies favoring tax cuts, tariffs, and tightened immigration, initially drove inflation expectations higher, supporting the U.S. Dollar and Treasury yields at the expense of gold prices. However, gold recovered as traders took profits ahead of the Federal Reserve’s policy decision.
Impact of Fed Rate Cut on Gold Prices
The Fed concluded its two-day meeting on Thursday by cutting the federal funds rate by 25 basis points, aligning with market expectations and setting the new target range between 4.50% and 4.75%. Although the U.S. Dollar saw a temporary boost following the announcement, it retreated during Chairman Jerome Powell’s press conference. Powell emphasized the Fed’s continued commitment to a gradual easing cycle and noted that the presidential election would not influence immediate policy changes. He further underscored his intention to remain at the helm, despite any potential pressure from President Trump.
This dovish stance by Powell led to renewed selling pressure on the U.S. Dollar, supporting a recovery in gold prices. However, the optimism surrounding Trump’s policies continues to underpin the greenback’s strength, posing a challenge for further gold price gains.
Upcoming Data and Market Movements
Investors are now looking ahead to U.S. consumer sentiment and inflation expectations data, which could influence both the Dollar and gold prices as markets adjust following an eventful week. Additionally, positioning adjustments ahead of next week’s U.S. Consumer Price Index (CPI) report could spark further market activity.
End-of-week trading flows may inject additional volatility into gold prices as traders reassess their positions.
Technical Analysis of Gold Prices
The daily chart shows that gold prices rebounded from significant support at $2,641—coinciding with the 50-day Simple Moving Average (SMA) and the 78.6% Fibonacci retracement level from the rally that began on October 10 at $2,604 and peaked at $2,790. This rebound prompted buyers to test the 21-day SMA, located around $2,712.
Currently, gold is confined between resistance at $2,718 (the 21-day SMA and the 38.2% Fibonacci level) and solid support at $2,641. The 14-day Relative Strength Index (RSI) holds steady around the neutral 50 mark, suggesting indecisiveness in market direction.
Should gold prices drop below the 50% Fibonacci level at $2,695, the next support is expected at the 61.8% Fibonacci retracement around $2,673. A more pronounced decline could see gold revisiting the $2,641 support zone.
Conversely, a break above the $2,718 resistance level could pave the way for a new upward trend, targeting the $2,745 resistance zone where the 23.6% Fibonacci level lies. Further gains may extend to the $2,760 level, with the all-time high of $2,790 as a potential long-term target.
Conclusion
Gold remains at a crossroads, trapped between strong technical levels and influenced by broader economic factors such as the U.S. election outcome, Fed policy, and data releases. While the commitment to monetary easing supports gold, the resilience of the U.S. Dollar and market anticipation of key economic indicators will shape gold’s trajectory in the near term. Investors should remain vigilant as fluctuating market conditions continue to impact gold’s performance.
Related topics:
- Gold Sales Decline as Silver and Diamonds Gain Popularity on Dhanteras 2024
- India’s Gold Demand Expected to Fall to Four-Year Low Amid Price Surge, Says World Gold Council
- Astral Resources Reports Impressive 3m Drill Hit of 5.7 Ounces to the Tonne Gold
