Gold Price Analysis: XAU Drops 3% Amid Tariff Threats: Key Levels to Watch
Gold steady after 3% drop as Trump tariffs threaten trade wars. Safe-haven demand returns.
Gold is holding up okay after yesterday’s big sell off, so some safe-haven demand. More to come as geo and trade risks come back into focus. – Matt Simpson, City Index.
Geo risks remain high with Biden and Macron brokering a ceasefire in Lebanon between Hezbollah and Israel. Trump’s trade talk may keep investors cautious and gold in focus as a volatility hedge.
Fed Policy in Focus: Rate Cuts Loom
The Fed is key to gold. Minneapolis Fed President Neel Kashkari has said he’s open to another cut. Markets now price in a 55.9% chance of a 25bps cut in December according to the CME Group’s FedWatch Tool.
Lower rates are good for gold as it reduces the cost of holding non-yielding assets. This week, we’ll see US consumer confidence, Fed minutes and Q3 GDP revision.
Technical Outlook: Key Gold Levels to Watch
Gold is currently trading at $2,622.75, down 0.21% on the day. A technical breakout below the $2,663 channel support has shifted momentum to the downside, exposing key support levels at $2,592.87, $2,567.09, and $2,537.87.
The Relative Strength Index (RSI) has fallen sharply to 39.37, signaling bearish momentum. The 50-day Exponential Moving Average (EMA), now at $2,648.15, acts as immediate resistance. On the upside, recovery hinges on reclaiming $2,663, with higher resistance levels at $2,695.44 and $2,722.94.
Key Insights:
Support Levels: Immediate support lies at $2,592.87, followed by $2,567.09 and $2,537.87.
Resistance Levels: Overhead resistance is seen at $2,663, $2,695.44, and $2,722.94.
Fed Dynamics: A potential December rate cut may provide gold with renewed upward momentum.
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