The Gold price is currently facing critical technical levels that may determine its short-term direction. A one-week low of $2,644-$2,643, observed on Monday, seems to act as a barrier protecting the immediate downside. Below this, the $2,625 area and the monthly low around $2,614 may offer additional support. However, a decisive break below $2,600 would likely prompt bearish traders to take action, potentially leading to a significant decline in Gold prices.
Geopolitical tensions and the ongoing Russia-Ukraine conflict continue to offer support to Gold as a safe haven, despite pressure from rising US Treasury bond yields. The US Dollar remains strong due to expectations of a less dovish stance from the Federal Reserve, which benefits from the elevated yields. This acts as a headwind for Gold, a non-yielding asset. Traders are now awaiting the US Retail Sales figures for further direction, especially with the Federal Open Market Committee (FOMC) decision set for Wednesday.
Economic data released on Monday revealed a robust US economy, with the S&P Global flash US Services PMI rising to its highest level in more than three years. Meanwhile, the Composite PMI also surged, reinforcing expectations for a less dovish Fed. This, coupled with concerns over inflation and the policies of US President-elect Donald Trump, has led to higher yields on US government bonds, which reached their highest level since November.
On the geopolitical front, new US sanctions against North Korea and Russia, along with ongoing tensions in the Middle East, further add to the uncertainty. These factors are likely to maintain Gold’s appeal as a safe haven. However, traders are keenly awaiting the release of US Retail Sales data for potential short-term opportunities, while the FOMC meeting on Wednesday remains the primary focus.
Gold may face selling pressure near the overnight swing high around the $2,664-$2,666 region. The key technical levels, particularly around $2,600, will be crucial in determining whether the price can hold or whether a deeper correction is imminent.
London-listed company KEFI Gold and Copper plc (LON:KEFI) is an exploration and development company focused on gold and copper deposits in the highly prospective Arabian-Nubian Shield. The Company operates in Ethiopia and Saudi Arabia with projects including Tulu Kapi project, Jibal Qutman EL and Hawiah.
