- Gold prices remain in positive territory, rising 0.50% ahead of Monday's US trading session.
- Overnight, Germany’s Far-Right AfD secured 20% of the votes, while the CDU maintained a strong lead.
- The US Dollar Index remains flat as US yields continue to soften, creating room for Gold to edge higher.
Gold (XAU/USD) holds onto intraday gains on Monday, trading near $2,947, supported by a weaker US Dollar and softer US yields following the German federal election outcome. While the far-right Alternative for Germany (AfD) secured 20% of the votes, the Christian Democratic Union (CDU) maintains a strong lead with 208 seats compared to AfD’s 152. The Euro’s rally on the election results pressured the US Dollar, providing additional support for Gold.
Looking ahead, traders will focus on the US Gross Domestic Product (GDP) release for Q4 2024 later this week. With recent signs of slowing US economic activity, including Friday’s weaker Services PMI data, another decline in US yields could reinforce expectations of a Federal Reserve rate cut, potentially boosting Gold further.
Daily Digest Market Movers: Germany’s Coalition Talks and Market Reactions
- Equinox Gold Corporation has proposed a $5.4 billion acquisition of Calibre Mining, signaling continued consolidation in the mining sector as companies seek to capitalize on record-high gold prices, according to Bloomberg.
- The US Dollar weakened after last week’s economic data showed slowing US business activity and declining consumer confidence. Inflation expectations surged, prompting markets to price in additional Federal Reserve rate cuts this year, Bloomberg reports.
- In Germany’s federal election, CDU leader Friedrich Merz secured victory but faces challenges in forming a coalition government. The far-right AfD doubled its support to 20.8%, emerging as the second-largest party but failing to secure a blocking minority, reports the Financial Times.
Technical Analysis: Gold Eyes New Highs Amid Volatility
Traders are facing whipsaw price action, making it difficult to navigate the Gold market. With increasing predictions from major banks that Gold could hit $3,000, there is growing risk that the price may never actually reach that level. A similar pattern was seen in the EUR/USD earlier this year when analysts widely forecasted parity, only for the pair to move higher instead.
For Monday, the all-time high of $2,955 remains the key resistance level to watch. Before reaching that mark, daily R1 resistance at $2,951 serves as an initial hurdle. If Gold breaks higher into uncharted territory, R2 resistance at $2,967 would be the next target.
On the downside, Gold has strong support levels in place. The daily Pivot Point at $2,934 is the first cushion, followed by S1 support at $2,918, which aligns with Friday’s low. If selling pressure extends further, the psychological $2,900 level comes into play, backed by S2 support at $2,901.
