Market Analysis

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Gold (XAU/USD) extends its upward momentum during the early European session on Tuesday, reaching its highest level since November 6, around $2,729-2,730. Concerns over a potential global trade war, triggered by US President Donald Trump's tariff comments, increase demand for the safe-haven metal. Additionally, a decline in US Treasury bond yields, driven by expectations of two rate cuts by the Federal Reserve this year, further supports gold's appeal.

Investors now believe the Fed will halt its rate-cutting cycle later this month, as Trump's protectionist policies could reignite inflation. This helps the US Dollar recover much of its earlier losses, while the broader risk-on sentiment, reflected in the positive performance of equity markets, may limit new bullish bets on gold. However, the overall outlook remains favorable for near-term gains.

From a technical standpoint, gold has gained traction above the $2,720 resistance zone. Oscillators on the daily chart show positive momentum and are not yet in overbought territory, favoring further upside potential. Gold could rise towards the $2,735 resistance level, followed by the $2,746-2,748 zone. The momentum may continue toward challenging the all-time high of $2,790, reached in October 2024.

On the downside, support appears near the $2,700 mark. A drop below the recent low at $2,689 could trigger technical selling, pushing gold further down towards the $2,662-2,660 area. A break below this level could lead to a decline toward $2,635, followed by the $2,622-2,618 zone, where a key ascending trendline and the 100-day Exponential Moving Average (EMA) converge.

Paraphrasing text from "FXSTREET"all rights reserved by the original author.