Daily Price Outlook
Gold price (XAU/USD) is facing challenges in stopping its bearish trend, although it has found strong support around $2,779 level. However, the recovery is mainly due to a drop in US Treasury bond yields, which has given gold some relief. Apart from this, concerns over the economic impact of former US President Donald Trump's tariff plans are increasing demand for gold as a safe-haven asset.
Gold Gains Support from Rate Cut Expectations
On one hand, Trump's calls for lower interest rates and signs of slowing inflation in the US have raised expectations that the Federal Reserve (Fed) may ease its policies further. If interest rates drop, gold becomes more attractive since it does not yield interest like bonds or savings accounts.
On the flip side, the Fed's recent decision to pause rate hikes has supported the US dollar, keeping a lid on gold's gains. In the meantime, the strong risk sentiment in financial markets is also limiting gold's upside potential.
Stronger US Dollar and Trade Policies Keep Gold Under Pressure
On the US front, the broad-based US Dollar Index (DXY) remains steady around 108.00 after the Federal Reserve decided to keep interest rates unchanged at 4.25%-4.50% in its January meeting. This was expected as the Fed had already cut rates three times since September 2024, reducing them by a full percentage point.
The US Dollar strengthened after the Fed took a cautious stance, with Chair Jerome Powell stating that further rate cuts would depend on clear signs of lower inflation or weakness in the labor market. A stronger US Dollar puts pressure on gold prices, as it makes the metal more expensive for foreign buyers.
Adding to market concerns, former Trump Treasury Secretary Scott Bessent announced plans for new US import tariffs, starting at 2.5% and potentially rising to 20%. This aggressive trade policy could lead to economic uncertainty, influencing demand for safe-haven assets like gold.
If these tariffs disrupt global trade or trigger retaliation from other countries, investors might turn to gold as a hedge against market volatility. However, in the short term, the stronger US Dollar limits gold’s upside potential, keeping prices under pressure unless economic conditions weaken further.
GOLD (XAU/USD) – Technical Analysis
Gold is trading near $2,759.71, slightly down 0.01%, as it consolidates around the $2,752.72 pivot point. The 50-day EMA at $2,758.53 is offering critical support, indicating a cautious but potentially bullish outlook if prices hold above this level.
Immediate resistance stands at $2,772.57, with further barriers at $2,786.26 and $2,800.25. A breakout above $2,772.57 could trigger buying momentum, targeting higher levels as sentiment shifts positively.
On the downside, immediate support rests at $2,730.85, followed by $2,717.11 and $2,703.56. A decisive break below $2,730.85 could expose gold to increased selling pressure, pushing prices toward deeper support zones.
The current consolidation phase suggests traders are awaiting a catalyst—whether from economic data, Federal Reserve policy signals, or geopolitical developments—to define the next directional move.
A buy signal above $2,752 aligns with a take profit target at $2,772 and a stop loss at $2,741, offering a balanced risk-reward setup for those favoring a bullish stance.
Gold’s resilience near the 50-day EMA and key support levels indicates that buyers are defending the uptrend.
However, the proximity to immediate resistance requires a cautious approach, as failure to breach $2,772.57 could result in a pullback toward support.
Traders should closely monitor volume trends and macroeconomic announcements for cues that might drive gold beyond its current range.
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