Gold prices are under sustained selling pressure, primarily due to the impact of the so-called “Trump trade.” Optimism surrounding stronger U.S. economic growth has boosted the USD to new year-to-date highs, while rising U.S. bond yields have further diverted interest away from gold.
The inflationary concerns tied to Trump’s proposed tariffs could prompt the Fed to reconsider its rate-cutting path, potentially pausing its easing cycle.
Wednesday’s October CPI report showed slower-than-expected progress in curbing inflation, which could lead to fewer rate cuts in 2024. Elevated U.S. Treasury yields continue to reinforce this trend, redirecting flows away from gold.
Despite dovish indications from the Fed, officials remain cautious about inflation’s trajectory, indicating a prudent approach for the months ahead. Nevertheless, recent FOMC commentary hints at a possible 25-basis-point rate cut in December.
The market’s current pricing for such a move has increased to 83%, according to CME Group’s FedWatch Tool, up from 63% before the CPI data was released.
Yet, gold buyers have struggled to leverage these dovish signals as the USD strength—fueled by optimism around Trump’s policies—continues to overshadow demand for the precious metal.
As a result, gold remains under pressure, with a strong USD acting as a significant headwind.
Technical Analysis
Source: TradingView
XAU/USD appears to remain under bearish control, closing below the $2,600 level on Wednesday. The 14-day RSI is pointing downward and is approaching oversold territory, currently below the 40 level.
The price recently touched the September 18 level at $2,550, which traders are now watching as potential support. If buying interest picks up here, we could see an attempt to recapture higher ground.
In the alternative scenario, if buying momentum fails to materialize, support may emerge around $2,526. A clear break below this level could extend the downtrend further.
