gold has regained some traction, trading above the $2,750 level, but is still confined within a range under its peak of $2,790. Traders are eagerly awaiting the forthcoming US advance Gross Domestic Product (GDP) report for potential market direction. The current technical indicators suggest that gold buyers are favored, with the potential of approaching previous highs.
The demand for gold appears to be supported today by a weakened US Dollar and declining US Treasury yields. This comes amid ongoing concerns about proposed tariffs by the Trump administration against Canada, Mexico, and China, which are set to take effect as early as this weekend. The economic backdrop is further complicated by mixed earnings reports from major technology firms, including Meta, Tesla , and Microsoft, all of which were released following the market closure.
Meta reported a 21% increase in revenue year-on-year and a considerable rise in net income, while Microsoft faced headwinds with lackluster revenue guidance. Contrarily, Tesla saw a surge in its share price in after-hours trading, despite disappointing results. These developments contribute to a cautious trading atmosphere where gold ’s traditional safe-haven appeal becomes increasingly attractive, especially as economic growth is expected to slow.
In light of these conditions, expectations for weaker economic performance could bolster interest in gold . The US economy is forecasted to expand at an annualized rate of 2.6% in the fourth quarter of 2024, a decrease from the prior quarter’s 3.1% growth. Additionally, the rising trade deficit suggests potential corrections in the forthcoming GDP figures.
Recent decisions from the Federal Reserve have also added to market volatility. The decision to maintain interest rates while adopting a slightly more hawkish approach has left traders adjusting their forecasts. Despite the Fed’s stance, gold prices mounted a modest recovery late Wednesday as the USD couldn’t hold on to its post-Fed gains.
From a technical perspective, the outlook for gold appears positive. Sustaining movement above the $2,765 resistance zone is crucial for establishing a new upward trend. Key targets above include $2,800 and the psychological $2,850 mark. On the downside, immediate support is identified at $2,745, with subsequent levels at $2,731 and $2,700.
