- Gold prices stall during European trading as President Donald Trump prepares to take office.
- With U.S. markets closed, traders anticipate an eventful week ahead.
- Despite growing concerns of a potential downturn, gold remains supported above $2,700.
Gold (XAU/USD) remains above $2,700 despite an earlier dip during the Asian session, as traders grapple with uncertainty surrounding President-elect Donald Trump, who is set to be sworn in as the 47th President of the United States later today. Concerns about Trump’s policies, including tariffs and immigration, have left traders reassessing their bullion positions. These policies could potentially boost gold’s appeal as a safe haven while simultaneously strengthening the US Dollar (USD). Political and trade uncertainties, along with ongoing geopolitical tensions, have driven recent gains in gold prices.
Meanwhile, a minority of bond traders speculate that the Federal Reserve’s (Fed) next move may be a rate hike rather than the widely anticipated cut, according to Bloomberg. Based on options tied to the Secured Overnight Financing Rate (SOFR), these traders estimate a 25% chance of a rate increase by year-end, as per Bloomberg Intelligence. Such a move could be detrimental to gold, which traditionally moves inversely to yields under normal market conditions.
Daily Digest: Market Movers – Bold Upside Calls Amid Bearish Concerns
- State Street Global Advisors, one of the world’s largest investment firms, predicts gold prices could climb to $3,100 an ounce this year, continuing the 2024 rally that marked the precious metal’s largest annual gain in 14 years, as reported by Financial Review.
- The latest Commitment of Traders (COT) report from the Commodity Futures Trading Commission (CFTC) shows hedge fund managers have increased their net long positions in gold and silver to a five-week high, according to Reuters.
- In the Middle East, a ceasefire in Gaza is taking effect as Hamas releases three female hostages in exchange for 90 Palestinian prisoners, Reuters reports.
Technical Analysis: Uncertainty Looms as Trump Takes Office
Gold faces a path of uncertainty in the coming days as President-elect Donald Trump is sworn in as the 47th President on Monday. A wave of new instructions and directives is expected, many of which are likely inflationary or could heighten geopolitical tensions—both scenarios that may weigh on gold.
Gold’s outlook carries notable downside risks, with no major support levels nearby. If prices fail to hold above $2,700, traders should watch the downward-sloping trendline from last week’s broken pennant chart pattern, located at $2,669, as the next key support. Further declines could bring the 55-day Simple Moving Average (SMA) at $2,647 into focus, followed by the 100-day SMA at $2,644.
On the upside, reclaiming the $2,708 level is essential for considering further gains. Above this, the next resistance level lies at $2,721, which served as a double top in November and December. If gold manages to breach this level, the all-time high of $2,790 becomes the critical upside target.
