gold prices (XAU/USD) demonstrated a bullish trend during the Asian trading session on Wednesday, continuing the recovery from a recent low around $2,600. This upward movement is largely attributed to ongoing geopolitical uncertainties, particularly related to the Russia-Ukraine conflict and concerns regarding tariff plans proposed by U.S. President-elect Donald Trump. These elements have contributed to a sustained influx of safe-haven investments into gold .
In contrast, the US Dollar is experiencing consolidation at the lower end of its weekly range, which has also supported gold prices. Despite positive macroeconomic data from the US, expectations of a potential shift toward a less accommodating monetary policy by the Federal Reserve are causing caution among investors. Participants in the market are currently looking ahead to US inflation figures for insights that might influence the direction of future rate adjustments.
Amid rising tensions, Trump’s proposed tariffs on imports from Canada, Mexico, and China have fueled further demand for gold as a safe haven. The conflict in Ukraine has escalated with reports of a significant drone attack, and Russia’s advancements appear to have gained momentum. Notably, reports suggest that North Korean troops may be involved in the conflict, while Ukraine is also targeting strategic sites within Russia. Meanwhile, a ceasefire agreement between Lebanon and Israel marked a rare moment of de-escalation in Middle Eastern tensions.
On the economic front, the US Consumer Confidence Index showed an increase to 111.7 in November, the highest level observed since July 2023. Recent Federal Reserve minutes revealed a split among officials regarding the need for further rate cuts. Current market expectations indicate a 63% probability for a 25 basis point cut in interest rates at the upcoming December meeting. As traders monitor the situation, Thursday’s economic releases, including the preliminary Q3 GDP data and the Personal Consumption Expenditure (PCE) Price Index, will be critical for guiding future investment decisions.
Technically, gold appears to be facing resistance near the 100-period Simple Moving Average (SMA) on the four-hour chart, specifically around the $2,645 level. Should prices successfully breach this barrier, there could be further advancement towards the $2,665 and subsequently the $2,677 – 2,678 zones. However, on the downside, strong support is anticipated in the $2,624 – 2,622 range, with $2,600 as a key level. A significant drop below this could signal renewed bearish pressure, potentially leading to tests of lower support levels near $2,569 and $2,537. Such a breakdown would indicate a continuation of the downward trend that began from the $2,800 peak observed in October.
