Market Analysis

Gold prices (XAU/USD) have rebounded from an intraday dip to around $2,738, reaching a new all-time high as the European session begins on Wednesday. This surge is fueled by ongoing geopolitical tensions from conflicts in the Middle East and persistent political uncertainty in the US, both of which bolster demand for this safe-haven asset. Additionally, anticipated interest rate cuts from major central banks are providing further support for gold, which does not yield interest.

In contrast, the US Dollar (USD) continues its upward trend that began earlier this month, reaching its highest point since early August. This rise is attributed to expectations of a more measured approach to policy easing by the Federal Reserve (Fed). The outlook for smaller rate cuts by the Fed is also supporting elevated US Treasury bond yields, which may discourage traders from making new bullish bets on gold, especially given the slightly overbought conditions indicated on the daily chart.

Technical Outlook: The gold price is poised to test the ascending trend-channel resistance around $2,767. Technically, XAU/USD encountered resistance near the $2,750 mark, which coincides with the upper boundary of a two-week-old ascending channel at approximately $2,767. This level is critical; a decisive breakout above it could facilitate an extension of the prevailing upward trend, potentially pushing gold towards the $2,800 milestone.

Conversely, should the price decline, it is likely to find solid support near the $2,725 level, which marks the lower boundary of the aforementioned trend channel. A significant breach below this level may trigger technical selling, driving the gold price down to around $2,700, followed by potential support in the $2,680-$2,675 range. This latter area aligns with the 100-period Simple Moving Average (SMA) on the 4-hour charts, expected to provide robust support.

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