Gold Prices Decline as Trump's Win Strengthens USD

Gold prices have seen a significant decline, dropping over 3% to reach 2650 USD per troy ounce. This downturn is largely attributed to a rising US dollar, which has gained strength following Donald Trump's decisive victory in the recent presidential election. As of Thursday, gold values are stabilizing at three-week lows, indicating persistent pressure from the robust dollar.

Investor sentiment is shifting as market participants anticipate a more conservative stance from the Federal Reserve regarding interest rate cuts. Trump's election victory is viewed as pro-inflation due to his protectionist policies, which could encourage the Fed to maintain elevated lending rates to address any possible inflation spikes. This could reduce the attractiveness of non-yielding assets like gold, which do not provide interest income.

The focus of today's market is the Fed's upcoming interest rate decision, with expectations leaning towards a 25-basis-point cut. This expectation has already been factored into the market, directly influencing current gold prices.

The future of gold prices will be closely tied to the Fed's comments and future rate decisions. Although rates are projected to decline, the timing and extent of these cuts will be crucial for gold's attractiveness.

Technical Analysis of XAU/USD

In terms of technical movement, gold peaked recently at 2790 USD, but then entered a consolidation phase below this level. A downward exit from this range has set the stage for a substantial correction, with gold currently in its initial phase of retracement. The immediate downside target is set at 2617.40 USD, which may extend down to 2575.75 USD if the bearish trend continues. The MACD indicator corroborates this negative outlook, as its signal line is sharply falling below the zero line, signaling further declines ahead.

A look at the hourly chart suggests a downward momentum aiming for the 2635.65 USD mark. If this target is achieved, a brief corrective rally could occur up to 2683.11 USD before the primary downtrend resumes towards 2617.17 USD as the main target in this bearish segment. The Stochastic oscillator is indicating a potential for short-term recovery, as its signal line approaches the 80 threshold, hinting at a minor uptick prior to another downward move.

Disclaimer: Any forecasts contained herein are based on the author's opinion. This analysis should not be treated as trading advice. The author bears no responsibility for any trading results based on the recommendations found herein.

Gold, USD, Trump