Gold stabilizes at support levels ahead of US core PCE data release

• The US PCE Price Index and quarterly GDP data released today will significantly impact the gold market.

• Strong economic growth and persistent inflation in the data could strengthen the US Dollar and pressure gold prices.

• The ascending channel in gold's daily chart shows a strong support area reinforced by technical factors.

The release of the US PCE Price Index and quarterly GDP data later today will significantly influence the gold market. If the data indicate strong economic growth and persistent inflation, it could strengthen the US dollar. This, in turn, would put pressure on gold prices. Weaker-than-expected data could increase gold’s appeal as a safe-haven asset. This is especially true amid ongoing market uncertainties related to trade and fiscal policies.

The Federal Reserve's cautious approach, outlined in the recent FOMC meeting minutes, indicates a careful stance on rate adjustments. The Federal Reserve will consider rate cuts only if the economic outlook shows significant deterioration. This stance limits the downside for the USD and indirectly weighs on gold. However, geopolitical developments, such as President-elect Donald Trump's tariff threats, create additional uncertainty. The nomination of Scott Bessent as Treasury Secretary further contributes to this uncertainty. These factors could create volatility in the gold market, particularly if they disrupt risk sentiment or affect global economic forecasts.

In Europe, concerns over the economic outlook and expectations of rate cuts by the ECB are also relevant for gold. A weaker Euro and potential downward pressure on European economies may strengthen the USD, further challenging gold prices. If global trade tensions intensify, gold may find support as a hedge against these risks. Similarly, disappointing US economic data could also boost gold's appeal. These economic and geopolitical factors will likely keep gold traders closely watching market developments.

Gold stabilizes at support levels

The daily gold chart shows the price trades within an ascending channel, exhibiting strong volatility. The price recently dropped from the significant resistance level of $2,790, notably marked on the weekly and monthly charts. The correction has now reached a strong support area at $2,560. The ascending channel's lower boundary defines this level as a support area. The intersection of the red-dotted trend line further reinforces it, making it a critical support zone. The strong rebound from this region underscores its importance.

However, the price failed to break above $2,720 and declined on Monday, signalling ongoing price consolidation within broader ranges. A decisive break below $2,540 could trigger another drop in the gold market. This decline may present a strong buying opportunity for traders.

With the Thanksgiving holiday approaching, reduced market activity could result in price swings in both directions. Traders should remain cautious and closely monitor key levels for potential breakout or reversal signals.

Trading during strong price swings can be challenging. Traders may consider buying on dips to capitalize on key levels. For example, a trade by Gold Predictors was activated at $2,555, which was identified as a key level and strong support. The $90 profit from this trade demonstrates that the gold market can still yield substantial returns despite ongoing uncertainties and geopolitical tensions.

Bottom line

In conclusion, economic data releases, geopolitical developments, and technical factors drive significant movement in the gold market. The upcoming US PCE Price Index and GDP data will offer critical insights into the economic outlook. These insights are expected to influence the US Dollar and gold prices. Geopolitical uncertainties, such as tariff threats and global trade tensions, add to the market's complexity, potentially creating volatility. Technically, gold's consolidation within the ascending channel emphasizes the need for careful observation. Its rebound from key support levels further highlights the importance of closely monitoring price action. Reduced liquidity during the Thanksgiving holiday may lead to sharp price swings. Traders should exercise caution and stay vigilant for opportunities arising from market fluctuations.

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