gold prices have paused their upward trend, lingering just below the $2,700 level in Asian markets on Monday. Following a strong rally in the previous week, buyers appear to be showing signs of fatigue, holding the price in a narrow range.
The US Dollar has entered a phase of bullish consolidation, along with Treasury bond yields, which has contributed to gold ’s stagnation below last week’s peak of $2,698. However, China’s endeavors to stabilize its currency and stimulate economic growth are providing some support for gold , preventing significant declines. There are also concerns regarding the potential trade policies of the incoming US administration, which could influence inflation and the broader economy, bolstering the allure of gold as a safe-haven asset.
Adding to the inflationary concerns is the recent surge in West Texas Intermediate (WTI) crude oil prices, fueled by new US sanctions on Russian oil supplies. These sanctions are anticipated to impact exports from Russia to major consumers such as China and India, further elevating inflation fears and supporting gold ’s status as a hedge against economic instability.
As the week unfolds, traders may consider profit-taking on long positions in anticipation of upcoming data releases, particularly the US Consumer Price Index (CPI) scheduled for Wednesday. This data could provide insight into the Federal Reserve’s monetary policy trajectory, especially after the positive Nonfarm Payrolls report from Friday, which showed stronger-than-expected job creation in December.
Investment trends in physical gold in both India and China will also be closely watched as new trading signals emerge. Reports indicate that gold discounts in India have increased due to rising local prices, while buying appears to be gaining momentum in China ahead of the Year of the Snake.
From a technical analysis perspective, despite a short-term bearish signal, gold prices have displayed resilience, breaking out from a month-long symmetrical triangle pattern. The 14-day Relative Strength Index (RSI) remains above the neutral threshold, suggesting that prices could surge past the $2,700 level if momentum builds. Key resistance levels are positioned at $2,710 and $2,726, while crucial support lies around $2,645 and further down at $2,615.
