gold prices opened the week on a bearish note, marking the first dip after five consecutive days of gains. This downturn comes as the US Dollar experiences renewed demand, prompted by heightened geopolitical tensions and tariff threats from the US. Specifically, President Trump has issued warnings of imposing 100% tariffs on BRICS countries — Brazil, Russia, India, China, and South Africa — if they attempt to produce or endorse a currency that competes with the US Dollar. This news has overshadowed previous optimism surrounding positive manufacturing data from China, the largest consumer of gold .
As the market digests these developments, traders are increasingly focusing on the potential for a 25 basis points interest rate cut by the US Federal Reserve this month. Current estimates suggest approximately a 65% likelihood of a rate reduction in December, a factor that could provide a cushion for gold prices despite the prevailing dollar strength. Additionally, the ongoing conflict in Ukraine and recent unrest in Syria contribute to an atmosphere of uncertainty that typically enhances gold ’s status as a safe-haven asset.
Looking ahead, gold traders are anticipating the release of the US ISM Manufacturing PMI data, scheduled for later today, along with a series of employment figures throughout the week. These economic indicators are crucial in shaping expectations surrounding the Federal Reserve’s future monetary policy, which has direct implications for non-yielding assets like gold .
From a technical perspective, bearish sentiment appears to be consolidating as the 14-day Relative Strength Index drops below the neutral 50 mark. The previous week’s bearish crossover reinforces the downside risks for gold prices. Immediate support is seen at last week’s low of $2,605, with further declines potentially targeting the 100-day Simple Moving Average at $2,576. On the upside, the 21-day SMA at $2,645 has emerged as a critical resistance level, while a sustained rally would require gold to break above the 50-day SMA at $2,670, setting the stage for a climb towards $2,700.
