Gold Prices Hit Record High: Will $2,954 Resistance Break?

The U.S. Dollar Index (.DXY) reached its lowest level since December 10, making gold more affordable for international buyers. “Investors believe that gold prices will continue to appreciate in the coming weeks and months,” said Jim Wyckoff, a senior market analyst at Kitco Metals. “The path of least resistance for gold remains sideways to higher, and as long as uncertainty persists, gold is likely to continue rising.”

Additionally, the SPDR Gold Trust, the world’s largest gold-backed ETF, reported an increase in holdings to 904.38 metric tons, the highest level since August 2023. This influx highlights growing investor interest in safe-haven assets.

US Tariff Plans and Inflation Fears Fuel Bullion Rally

The surge in gold prices comes on the back of President Trump’s warnings of imminent new tariffs, which are widely viewed as inflationary. These tariffs are expected to escalate trade tensions, fueling demand for gold as a protective asset. The possibility of trade wars is creating an environment of heightened uncertainty, prompting investors to seek security in gold.

Investors are now keenly watching Friday’s U.S. Personal Consumption Expenditures (PCE) report, the Federal Reserve’s preferred inflation gauge. The PCE report could offer insights into inflation trends, influencing the Fed’s interest rate strategy. A lower PCE reading may bolster gold prices by weakening the U.S. Dollar, while a higher reading could pressure gold by strengthening the greenback.

Market analysts also highlight that the Fed is likely to wait until the next quarter before cutting rates again. This cautious stance is expected to keep gold prices elevated, as lower interest rates typically enhance gold’s appeal by reducing the opportunity cost of holding non-yielding bullion.

Technical Analysis: Will Gold Break $2,954 Resistance?

Gold (XAU/USD) is trading at $2,936.23, displaying mild bearish pressure as it approaches the ascending trendline support at $2,935. The price is just above the 50 EMA at $2,935.88, serving as a critical support level. A break below this point could trigger a sell-off, targeting the pivot point at $2,922.

Immediate support is at $2,922, with further downside risks towards $2,895 and $2,877 if bearish momentum gains strength. Conversely, immediate resistance stands at $2,954, followed by $2,972. A breakout above $2,954 could shift sentiment to bullish, targeting the next level at $2,990.

The trend remains cautiously bullish as long as Gold holds above the ascending trendline and the 50 EMA. However, a decline below $2,922 would signal a potential trend reversal, favoring the bears.

Key Insights:

• Bullish Trend: Gold maintains a bullish bias above the 50 EMA at $2,935.88.

• Immediate Support: $2,922; a break below could lead to $2,895 and $2,877.

• Key Resistance: $2,954; a breakout could target $2,972 and $2,990.