Gold’s upward momentum might face resistance if the US Dollar makes a strong comeback driven by risk aversion. A modest rebound in US Treasury bond yields could also hinder gold’s advance. The renewed strength in gold prices early Thursday is attributed to escalating US-China trade tensions, which are expected to intensify with a likely Trump presidency. Market speculation that Donald Trump might win the US Presidential election has gained traction following a recent attack.
A report that the US is considering tighter restrictions on exports of advanced semiconductor technology to China caused chip stocks and the Nasdaq to tumble overnight, with major players like Nvidia and Apple leading the decline. Markets will be closely monitoring mid-tier US Jobless Claims data and speeches from several Federal Reserve policymakers for new trading cues for gold prices. These speeches are crucial as they will shape market expectations regarding the Fed’s interest rate outlook before the Fed’s ‘blackout period’ begins on Saturday.
Gold prices remain poised to target the $2,500 level if the previous record high of $2,484 is convincingly breached. The next significant resistance level is anticipated at the psychological mark of $2,550.
Conversely, if gold prices correct lower, the previous all-time high at $2,450 will be tested again, with further downside potential to the $2,400 level. The next relevant support levels are identified at the July 11 low of $2,371 and the psychological threshold of $2,350.
As markets digest these developments, the interplay between geopolitical tensions, Fed policy signals, and economic data releases will be crucial in determining the trajectory of gold prices.