gold prices are experiencing a pullback after reaching near a three-month high of $2,786. Traders are exercising caution ahead of significant economic events, particularly focusing on US trade policies and upcoming announcements from the Federal Reserve. The recent rise in the US Dollar, fueled by renewed concerns over a global trade war, is contributing to the downward pressure on gold prices.
Profit-taking among gold investors has increased, leading to liquidations of long positions as the metal approaches its record highs. The recent announcement of a trade tariff on Colombian imports, along with threats from Colombian authorities to retaliate, has heightened the sensitivity of gold prices to fluctuations in risk sentiment. As the geopolitical landscape becomes more volatile, gold , typically a refuge during tumultuous times, faces increased competition from the strengthening dollar.
In addition to trade tensions, disappointing economic indicators from China further exacerbated market anxiety. The manufacturing sector in China showed unexpected contraction, with the official purchasing managers’ index (PMI) falling to 49.1, below the anticipated figure of 50.1. This data has contributed to a risk-off sentiment in global markets.
Despite these challenges, the technical outlook for gold remains positive in the short term. The metal has successfully reached its symmetrical triangle target, though it has yet to maintain a daily closing above $2,785. The recent bullish crossover seen between the 50-day and 100-day moving averages indicates potential upward momentum. However, gold must close above its previous high at $2,790 to establish a new ceiling.
Support levels are set at $2,736 from January 23, with a further drop potentially leading to the $2,700 level. Should prices continue to decline, the 21-day moving average at $2,686 will be closely monitored. As market participants weigh these factors, gold ’s volatility is likely to persist in the short term.
