XAUUSD: How Will Gold Prices Move Next?Fundamental approach:
- Trade Talks and Gold Sentiment:
Gold experienced a sharp correction after reaching record highs, primarily due to improving risk sentiment as optimism grew around US-China trade negotiations. Reports indicate that both nations have reached a preliminary framework agreement on export controls and tariffs, which is expected to ease geopolitical tensions and reduce demand for safe-haven assets, such as gold.
- Other Pressures: Fed Policy and the US Dollar:
The gold market is also reacting to expectations of a Fed rate cut. While a rate cut typically supports gold, the move is largely priced into the market. Recent steadiness in the US dollar, as well as the possibility of a less dovish stance from the Fed, has added further pressure. With traders focusing on upcoming policy signals and macroeconomic data, a "cut and pause" approach from the Fed could prompt continued profit-taking in gold.
- Outlook:
As long as US-China relations remain stable and central banks, especially the Fed, avoid surprising markets with additional dovish measures, XAUUSD may remain under pressure.
Technical approach:
- XAUUSD significantly declined to the support area of 3890-3950. The price is between both EMAs, indicating a shift to sideways movement.
- If XAUUSD breaches the support area, the price may decline to the next support level at 3720, which is confluenced with the 61.8% Fibonacci Extension.
- Conversely, remaining above the support area may prompt a retest of the next resistance at 4054.
Analysis by: Dat Tong, Senior Financial Markets Strategist at Exness
