Gold retreats as Trump victory bolsters USD

Gold prices tumbled over 3% to 2650 USD per troy ounce amid a surging US Dollar, influenced by Donald Trump’s definitive win in the US presidential election. As of Thursday, gold prices are holding steady near three-week lows, reflecting ongoing pressure from a robust dollar.

Market anticipation has shifted, with investors expecting a more conservative approach from the Federal Reserve to interest rate cuts. Trump’s victory, perceived as pro-inflation due to his protectionist policies, could prompt the Fed to maintain higher lending rates to counter potential inflation spikes, diminishing the appeal of non-yielding assets like Gold.

Today’s focus is squarely on the Fed’s interest rate decision, which is anticipated to bring a 25-basis-point cut. This has been priced into the market, influencing the current Gold prices.

Gold’s future movements will hinge heavily on the Fed’s commentary and subsequent rate decisions. While rates are projected to decrease, the pace and extent of these cuts will be critical for Gold’s appeal.

Technical analysis of XAU/USD

Gold’s market dynamics recently peaked at 2790.00, after which a consolidation range formed below this level. Exiting this range downward opened the pathway for a significant correction, with Gold forming its initial corrective wave. The immediate downside target is 2617.40, potentially extending to 2575.75 if the downward trajectory persists. The MACD indicator supports this bearish outlook, with its signal line trending sharply downward below zero, suggesting further declines.

The hourly chart outlines a developing downward wave aiming for 2635.65. Should this target be met, a corrective rally to 2683.11 could occur before further declines resume towards 2617.17, marking the primary target in this bearish phase. The Stochastic oscillator indicates potential for short-term upside, with its signal line approaching the 80 level, suggesting a brief corrective uptick before continuing its descent.