As Gold approached the $2,080 mark, a shift in momentum saw it retreat to around $2,060, influenced by the resurgence in US Treasury bond yields. With the year-end dynamics in play, investors exercise caution and remain cautious about significant positions in XAU/USD.
Fundamental Outlook on Gold (XAUUSD)
As the year draws to a close, Gold is witnessing increased interest during the Asian trading hours, buoyed by cautiously positive market sentiment and a weakening US Dollar. With the year-end dynamics at play, investors are hesitant to make significant moves on the Gold price, holding it in a consolidation phase near the $2,070 mark.
Looking ahead, various factors such as risk appetite, the trajectory of the US Dollar, and potential profit-taking could shape Gold’s movement, especially as traders adopt a more reserved stance leading up to the prolonged New Year weekend.
Yesterday saw Gold oscillate, initially touching a three-week high before settling beneath $2,070. The metal initially gained from a weakening US Dollar and subdued US Treasury bond yields. However, robust US bond auctions and tempered expectations of aggressive rate cuts from the US Federal Reserve later curtailed Gold’s ascent.
A resurgence in the US Dollar, which rebounded from its five-month nadir against key currencies, combined with a slight rise in US Treasury bond yields, prompted market participants to reevaluate their positions on the currency, especially as trading conditions thinned out towards the weekend.
Despite a mix of economic signals from the US, including a 5.2% yearly dip in the Pending Home Sales Index and a slight uptick in weekly unemployment claims, investors maintained a measured stance, allowing the US Dollar some respite.
Technical Outlook on XAUUSD
In the Gold (XAUUSD) market, the $2,000 price level has historically served as a significant resistance point. However, recent dynamics as the year concludes suggest a potential shift, with the market possibly establishing support above this $2,000 threshold, effectively turning prior resistance into support. In early December, gold even reached a notable peak of $2,153. Yet, by the final week of the year, it registered a lower high at $2,087. Currently, the market is trending back towards the $2,000 mark. Based on historical patterns in the gold market, even as bullish momentum builds, there is an indication that prices may not surpass the $2,000 level.
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