Gold Prices Surge as US Dollar Weakens
- The US Federal Reserve expected to cut interest rates by 25 basis points
- Gold prices rally after Wall Street opening, nearing $2,700
- Technical outlook shows limited upside potential for XAU/USD
Gold prices surged as the US Dollar weakened, with Spot Gold reaching near the $2,700 mark after trading as low as $2,643.28 earlier in the Asian session. The weakening US Dollar was fueled by persistent strength in stocks following the US presidential election results. Global indexes closed in the green, reflecting renewed risk appetite that put pressure on the USD.
US indexes traded mixed, with the S&P500 extending its rally while the Dow Jones Industrial Average struggled to maintain ground. Market focus shifted to the Federal Reserve’s monetary policy announcement, where a 25 basis points rate cut was widely anticipated. However, attention also turned to how the Fed would respond to recent political developments in the US, particularly with President Trump’s victory potentially impacting inflationary pressures.
Technical Analysis for XAU/USD
From a technical standpoint, XAU/USD faces limited upside potential. The daily chart shows the metal below its 20 Simple Moving Average (SMA) but with a bullish slope. The 100 and 200 SMAs also trend upwards, indicating a long-term bullish bias. However, technical indicators suggest a modest uptick, with the Momentum and RSI indicators hovering around neutral levels, signaling potential for additional gains in the future.
On the 4-hour chart, technical indicators have corrected oversold conditions but struggle to maintain momentum. The pair is supported by the 200 SMA at around $2,687.40, but the 20 SMA remains bearish, limiting near-term bullish potential. Support levels are at $2,687.50, $2,673.90, and $2,652.25, while resistance levels are at $2,700.00, $2,714.90, and $2,731.45.
Overall, the current market conditions indicate a cautious approach towards XAU/USD trading, with limited upside potential but room for gains in the long term.