In the aftermath of the Christmas break, gold prices, represented by XAU/USD, are experiencing an upward trend amid light holiday trading. The trading volume remains notably low, given the closure of key markets in regions like Australia, New Zealand, Hong Kong, and the Euro Zone for Boxing Day. This trend of limited trading activity is expected to persist throughout the remaining week of the year leading up to the New Year’s holiday.
Current Trading Figures
As of the latest update, XAU/USD is trading at $2064.63, reflecting a gain of $9.73 or +0.47%. Similarly, February Comex gold futures are at $2075.90, marking an increase of $6.80 or +0.33%. These figures signify a discernible yet modest uptick in gold prices during this holiday season.
Influences from U.S. Markets
The current upswing in gold prices is attributed to subdued movements in U.S. Treasury yields and the U.S. Dollar in early Tuesday trades. A pivotal factor contributing to this movement is the market’s growing anticipation of interest rate cuts by the Federal Reserve, potentially as early as March 2023. The dovish expectations are reinforced by the recent U.S. personal consumption expenditure data, which fell below expectations.
Outlook: Bullish with Caution
While the current market scenario appears bullish for gold, traders exercise caution. Analysts point out that the recent dip in inflation is primarily driven by a decline in goods prices, a trend that may not be sustainable in the long run. Furthermore, rent inflation remains high, although an anticipated decrease in the upcoming months is expected.
Ongoing geopolitical tensions, especially U.S. military actions in response to attacks in Iraq, contribute to gold’s appeal as a safe-haven asset. Traders are vigilantly monitoring these developments, recognizing their potential to significantly influence gold’s price trajectory in the near term.
Technical Analysis
Gold (XAU/USD) is presently trading at $2063.94, positioned above both the 200-day moving average of $1958.99 and the 50-day moving average of $1997.80. This placement indicates a robust bullish trend in the short to medium term.
The asset hovers near the minor resistance level of $2067.00, suggesting that a breakout above this point could fuel further upward momentum, potentially targeting the main resistance at $2149.00. Conversely, if a retracement occurs, the main support at $1987.00 serves as a significant threshold.
The current price positioning, coupled with its stance above key moving averages, portrays a generally bullish market sentiment for gold, signaling the potential for continued upward movement.
