This week gold (XAUUSD) has been volatile amid uncertainties in the global economy. On Wednesday, the US Federal Reserve (Fed) cut its key interest rate by 25 basis points to 4.25-4.50%. When the Fed cuts rates, the US dollar usually weakens, making gold more attractive to investors as it is traded in dollars.
However, the main factor stopping gold prices from rising was the Fed's cautious outlook for further rate cuts under the protectionist policies of US President-elect Donald Trump. The Fed's hawkish attitude caused a surge in US Treasury bond yields, which in turn helped the dollar strengthen to over two-year highs against major currencies. This creates additional challenges for gold as investors may prefer higher-yielding assets.
However, it should be emphasized that in the short term the market reaction may be quite volatile as participants will analyze the consequences of monetary policy changes. Yet, in the medium term, gold prices (XAUUSD) are expected to rise.
MACD analysis points to weakening bearish sentiments, while the Chaikin oscillator confirms that the bullish momentum is still at a low level. It is also important to note that with a weaker dollar, gold prices may rise significantly.
At this point, the most likely scenario for the next few days is sideways consolidation of gold prices. With lower rates and market volatility, the target for gold (XAUUSD) may be set at 2682, a partial profit-taking target at 2615.44 and a Stop loss at 2536.82. It is recommended to open positions in the range of 2536.82 to 2615.44 in order to take advantage of a potential rise in gold prices in response to economic policy changes.
This content is for informational purposes only and is not intended to be investing advice.
