Daily Price Outlook
Gold (XAU/USD) continued its upward momentum on Friday, trading near the $2,774 level and reaching an intraday high of $2,777 during the European session. This bullish run can be traced to several key factors influencing market sentiment.
However, the major driver was the weakening US Dollar (USD), triggered by comments from US President Donald Trump, who signaled a preference for avoiding tariffs on China. His remarks led to a drop in US Treasury bond yields, which in turn pushed the USD to a fresh monthly low.
Moreover, speculation about further monetary easing by the Federal Reserve (Fed) has been heating up. Investors anticipate that lower interest rates will continue to weaken the USD, enhancing gold’s role as an attractive alternative investment.
Impact of Trump's Comments on US Dollar and Federal Reserve's Upcoming Decisions
On the US front, the broad-based US Dollar has been losing traction but still it is holding above the 108.00 level. This suggests the dollar is performing well compared to other currencies.
Former President Donald Trump recently spoke at the World Economic Forum in Davos, Switzerland, calling for the US Federal Reserve (Fed) to lower interest rates immediately. He argued that with oil prices dropping, the Fed should cut rates to support the economy.
His remarks came ahead of the Fed's scheduled meeting on January 28 and 29, where traders expect the central bank to keep interest rates steady in the range of 4.25%-4.50%.
Trump’s comments could put pressure on the US dollar as they come just before the Fed’s meeting, with market expectations for the central bank to hold rates steady.
Moreover, Trump's policies might increase inflation, which could limit the Fed's ability to cut rates further. This situation creates uncertainty, and traders are closely watching the Fed's actions and any potential impact on inflation and the US dollar.
China's Stock Market Stabilization Efforts and Their Potential Impact on Gold Prices
On the other hand, Chinese authorities are taking steps to stabilize their stock markets, which could have an impact on global gold prices.
On Thursday, they announced measures such as allowing pension funds to invest more in domestic stocks and introducing a pilot scheme for insurers to buy equities in 2025, with an initial investment of at least 100 billion Yuan. These actions aim to support the stock market by boosting investments.
Apart from this, the People’s Bank of China (PBoC) stated that it would increase liquidity tools to help fund share purchases when needed. This could lead to more liquidity in the market, potentially reducing the demand for Gold as a safe-haven asset.
If these measures help stabilize China's markets, it could lower some of the risk appetite in global markets, influencing Gold prices to move lower as investors shift towards equities and other riskier assets.
GOLD (XAU/USD) – Technical Analysis
Gold prices are trading at $2,774.26, reflecting a 0.70% increase, as the precious metal gains momentum above key technical levels.
The price remains above the pivot point at $2,763.20, signaling bullish strength, with immediate resistance at $2,785.22. A break above this level could pave the way for further upside toward $2,796.49 and potentially $2,807.41.
On the downside, immediate support is positioned at $2,748.23, followed by deeper levels at $2,736.39 and $2,722.33.
The 50-day Exponential Moving Average (EMA) at $2,738.54 acts as a crucial support zone, reinforcing the broader bullish outlook. Holding above this level suggests sustained buying interest, keeping the uptrend intact.
The recent price action indicates strong bullish sentiment, with buyers showing resilience at key support levels. A decisive break above the resistance at $2,785.22 could attract further buying, targeting higher resistance zones.
However, failure to sustain above the pivot level of $2,763.20 may trigger a corrective move, testing immediate support.
From a technical perspective, the market structure remains favorable for bulls as long as the price holds above the pivot.
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