Gold Prices Near Record Highs: Will XAU/USD Break $3,000?
Gold prices edged higher to hover near recent record highs on Monday, supported by a weaker U.S. dollar as investors await a crucial U.S. inflation report later this week.
As of Monday, gold was trading around $2,939.30, maintaining support above the 50-day Exponential Moving Average (50 EMA) at $2,916.41. The asset’s price action reflects a bullish sentiment as it continues to respect the ascending trendline, signaling that buyers are defending the bullish structure.
According to Tim Waterer, Chief Market Analyst at KCM Trade, “Disappointing U.S. macro data at the tail end of last week has caught up with the dollar, which has opened the door higher for gold.” This indicates that the precious metal is benefiting from the dollar’s weakness, making gold more appealing to investors holding other currencies.
However, gold faces immediate resistance at $2,944.76. A break above this level could propel prices towards the next resistance at $2,954.71, with a potential to reach $2,972.00. Conversely, a breakdown below the pivot point at $2,922.69 could trigger a retest of the 50 EMA at $2,916.41. If this support level fails, the next downside target would be $2,895.48.
Geopolitical Tensions and U.S. Inflation Data in Focus
Geopolitical tensions continue to influence market sentiment, with U.S. President Donald Trump recently reversing his stance on Russia’s invasion of Ukraine. He also hinted at a potential minerals agreement between Kyiv and Washington, aimed at resolving the ongoing conflict. This development could impact gold’s safe-haven appeal if geopolitical risks ease.
Meanwhile, market participants are shifting their attention to the upcoming Personal Consumption Expenditures (PCE) report, the Federal Reserve’s preferred inflation gauge, set to be released on Friday. Should inflationary pressures persist, the Fed may maintain its high interest rate policy, potentially dampening gold’s appeal as a non-yielding asset.
Ajay Kedia, Director at Mumbai-based Kedia Commodities, noted, “To breach the $3,000 mark, gold needs a very strong reason as war premium seems to have waned a little, while other supporting factors are already discounted.” This suggests that gold’s upward momentum might be capped unless a significant catalyst emerges.
Gold (XAU/USD) Technical Outlook and Key Price Levels
Gold’s technical outlook remains bullish as long as prices stay above the 50 EMA and the ascending trendline. Traders should closely monitor the following key price levels:
Immediate Resistance: $2,944.76
Next Resistance: $2,954.71 and $2,972.00
Immediate Support: $2,922.69
50 EMA Support: $2,916.41
Next Support: $2,895.48
Key Insights:
Bullish Momentum: Gold is in an uptrend above the 50 EMA and ascending trendline.
Critical Resistance: A break above $2,944.76 would signal a bullish continuation.
Support Levels: $2,922.69 and $2,916.41 are crucial; a breakdown could shift the trend to bearish.
As gold prices consolidate near $2,939.30, investors are keenly watching the upcoming U.S. inflation data and geopolitical developments for cues on the next major move. A decisive break above $2,944.76 could reignite bullish momentum, while a drop below $2,922.69 might indicate a shift in trend bias.
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