The XAU/USD pair appears set to achieve gains for the eighth consecutive week, continuing a two-month-old upward trend. This bullish momentum is largely supported by concerns over potential trade tariffs introduced by former President Trump and the looming threat of a global trade war. These geopolitical tensions, combined with a prevailing bearish sentiment towards the US Dollar (USD), are expected to bolster the value of gold.
Traders are closely monitoring the upcoming flash Purchasing Managers' Index (PMI) figures for fresh insights into global economic health. These figures are anticipated to provide further impetus to gold as the weekend approaches. The market sentiment is further influenced by geopolitical risks, skepticism regarding US consumer health, and the dwindling strength of the USD. The USD has recently hovered near its lowest point since December 10, amidst speculation of further interest rate cuts by the Federal Reserve. These factors collectively lend support to the XAU/USD pair.
The daily Relative Strength Index (RSI) for gold is nearing the critical 70 mark, signaling caution for bullish traders. Despite this, the recent breakout through the $2,928-2,930 horizontal barrier—representing the top boundary of a short-term trading range—suggests that gold's path of least resistance remains upward. Yet, an intraday downtick has been noted, attributed to some profit-taking amid slightly overbought conditions on the daily chart.
Analysts expect the XAU/USD pair to find support at the $2,900 level. Bullish traders might opt for a period of consolidation and wait for sustained buying beyond the $2,950-2,955 region before placing fresh bets. Meanwhile, the pair is anticipated to be capped by the $2,950 level and move away from the all-time high reached the previous day.
Support is also anticipated around the $2,880 mark. However, if this support fails, the XAU/USD pair could potentially retrace to the $2,860-2,855 area, en route to the $2,834 zone and eventually to the $2,800 mark. This scenario underscores the importance of maintaining key support levels to sustain the bullish trend.