• Gold price attempts a tepid bounce from three-week lows of $2,644 early Thursday.
  • The US Dollar consolidates the Trump trades-led rally on the Republican candidate’s presidency.      
  • The daily technical setup for Gold price suggests that the tide has turned in favor of sellers.

Gold price is seeing a dead cat bounce from three-week lows of $2,644 in Asian trading on Thursday, as the dust settles in the aftermath of a massive sell-off, fuelled by Republican candidate Donald Trump’s victory in the US presidential race.

Gold price stays defensive, awaiting the Fed verdict

The US Dollar (USD) has entered a bullish consolidation phase after rallying to its highest level in four months against its major rivals, capitalizing on the return of Trump trades. Trump's policies on immigration, tax cuts and tariffs are expected to put upward pressure on inflation, Wall Street stocls, US Treasury bond yields and the USD.

These expectations from the Trump administration and their likely implications on the economy spelt doom for the non-yielding Gold price, smashing it about $100 from the static resistance of $2,750.

Attention now turns toward the US Federal Reserve (Fed) policy announcements due later this Thursday. Markets are fully pricing in a 25 basis points (bps) Fed rate cut this week but investors will closely scrutinize any hints on the central bank’s path forward on interest rates.

Donald Trump’s return to the White House could prompt the Fed to slow down on its easy cycle, as his expansionary fiscal policies are seen as highly inflationary.

Fed Chair Jerome Powell is expected to affirm the US central bank’s independence and that they will act as the economic and inflation outlook unfolds. Powell is likely to acknowledge the recent slack in the labor market and the progress on disinflation, reiterating that the Fed will remain ‘data-dependent’ while determining the next policy move.

Gold price technical analysis: Daily chart

As observed on the daily chart, Gold price cracked all the major Fibonacci Retracement (Fibo) support levels amid the Trump trades-induced sell-off on Wednesday.

The 14-day Relative Strength Index (RSI) also pierced through the midline to dive into bearish territory, currently trending near 43.

The leading indicator suggests that more downside remains in the offing. However, a temporary pullback following the previous slump cannot be ruled out.

A dovish message by the Fed could rescue Gold buyers so long as they defend the critical support at $2,641, which is the confluence of the 50-day Simple Moving Average (SMA) and the 78.6% Fibo level of the latest record rally from the October 10 low of $2,604 to the new all-time high of $2,790.

Gold buyers will then aim for acceptance above the 61.8% Fibo support-turned-resistance at $2,673. Further up, a strong topside barrier near $2,700 will be tested, where the 50% Fibo of the same ascent level aligns.  

If the Fed signals a slower pace of easing in the coming months, Gold price could see a sustained break below the abovementioned healthy support at $2,641.

A fresh downtrend will unleash toward the October 10 low of $2,604, below which the $2,550 psychological level will challenge the bullish commitments.

Economic Indicator

Fed Interest Rate Decision

The Federal Reserve (Fed) deliberates on monetary policy and makes a decision on interest rates at eight pre-scheduled meetings per year. It has two mandates: to keep inflation at 2%, and to maintain full employment. Its main tool for achieving this is by setting interest rates – both at which it lends to banks and banks lend to each other. If it decides to hike rates, the US Dollar (USD) tends to strengthen as it attracts more foreign capital inflows. If it cuts rates, it tends to weaken the USD as capital drains out to countries offering higher returns. If rates are left unchanged, attention turns to the tone of the Federal Open Market Committee (FOMC) statement, and whether it is hawkish (expectant of higher future interest rates), or dovish (expectant of lower future rates).

Read more.

Next release: Thu Nov 07, 2024 19:00

Frequency: Irregular

Consensus: 4.75%

Previous: 5%

Source: Federal Reserve

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended Content


Recommended Content

Editors’ Picks

GBP/USD moves away from multi-month low, retakes 1.2900 ahead of BoE/Fed

GBP/USD moves away from multi-month low, retakes 1.2900 ahead of BoE/Fed

The GBP/USD pair attracts some buyers during the Asian session on Thursday and moves away from its lowest level since mid-August, around the 1.2835-1.2830 region touched the previous day. 

GBP/USD News
EUR/USD hovers around 1.0750 with negative bias amid Trump trades

EUR/USD hovers around 1.0750 with negative bias amid Trump trades

EUR/USD holds ground after depreciating around 2% in the previous session, trading near 1.0740 during the Asian session on Thursday. The downside risk for the EUR/USD pair seems possible as the US Dollar may receive support from Trump trades following the victory of Republicans in the US election.

EUR/USD News
Gold: Will Fed Chair Powell rescue XAU/USD?

Gold: Will Fed Chair Powell rescue XAU/USD?

Gold price is seeing a dead cat bounce from three-week lows of $2,644 in Asian trading on Thursday, as the dust settles in the aftermath of a massive sell-off, fuelled by Republican candidate Donald Trump’s victory in the US presidential race.

Gold News
Top trending meme coins PEPE, BONK, and FLOKI achieve double-digit gains following Trump’s victory

Top trending meme coins PEPE, BONK, and FLOKI achieve double-digit gains following Trump’s victory

The prices of top trending meme coins Pepe, Bonk and FLOKI experienced double-digit gains following Trump’s victory on Wednesday. The technical outlook suggests that the three meme coins hover around key levels, and the breakout could push these coins higher.

Read more
Trump wins: Tax cuts come with a cost

Trump wins: Tax cuts come with a cost

Donald Trump’s victory will ensure a lower tax environment that should boost sentiment and spending in the near term. However, promised tariffs, immigration controls and higher borrowing costs will increasingly become headwinds through his presidential term.

Read more
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

Majors

Cryptocurrencies

Signatures