Gold prices found a solid footing around $2,689 during the Asian session on Monday. This support was crucial as the precious metal sought to maintain its upward trajectory. A pivotal break above the $2,720 mark is necessary for gold to sustain this momentum, potentially setting the stage for further gains. As the new week commenced, gold prices attracted dip-buyers, leading to a steady intraday ascent that continued into the early European session.
The recent price dynamics are influenced by market expectations surrounding former President Donald Trump's policies, which are anticipated to fuel inflation. This scenario could prompt the Federal Reserve to exercise caution in implementing aggressive rate cuts, thereby limiting the decline of the US Dollar. The US Dollar's softening reflects market forecasts of two Federal Reserve interest rate cuts in 2025, driven by easing inflation in the United States.
Last week's surge to a one-month high saw a subsequent price drop, but gold prices quickly reversed course as the US Dollar retreated from its recent resistance levels. The "base pattern" that emerged in mid-2023 marked the beginning of gold's uptrend, culminating in a significant breakout above previous resistance levels. Currently hovering near $2,700, gold suggests the potential for another breakout, with eyes set on new highs above $2,800.
If a breakout does occur, it could propel gold towards unprecedented levels. However, failure to break higher might lead to a temporary pullback, testing lower support levels. Despite these mixed fundamentals, the technical outlook remains bullish. Gold prices have reached the critical resistance level of $2,720, indicating a clear bullish trend characterized by a series of breakout patterns and consolidations.
The US Dollar's recent attraction of fresh sellers has eroded much of Friday's gains amid bets that the Federal Reserve will implement interest rate cuts twice this year. This shift has reinforced gold's position as a preferred investment during times of economic uncertainty and currency fluctuations.
In particular, trading signals and strategies have been instrumental in navigating these market conditions. For instance, GoldPredictors shared a day trade with its members on WhatsApp, highlighting a long position entry at $2,672. The trade set a stop loss at $2,642 and aimed for a target of $2,719, achieving a profit of $47 per ounce. This example underscores the potential for strategic trades amid fluctuating market dynamics.
As investors continue to monitor these developments, gold's performance remains contingent on several factors. The interplay between inflation expectations, Federal Reserve policy decisions, and currency movements will play a crucial role in determining the precious metal's future trajectory.