The key level is seen at $2,626 currently, with further short-term support seen closer to $2,600 for now.
But again, it is important to look at the background in the run up to January this year. Gold climbed by a staggering 27% in 2024 and that is despite a slight dent seen in November and December trading. It took more than a year for price to dip below the 100-day moving average and even then, we're seeing above that the break didn't have legs to it.
The caution for gold right now is that the dollar is also keeping rather poised since last month. As Trump continues to work his tariffs agenda and US data continues to support the narrative for the Fed to pause on rate cuts, we will be slowly chewing into the defensive layer of gold buyers. That especially if the bond market continues to play ball as well.
If there is a meaningful break under $2,600, that could really trigger a very sudden squeeze in gold. If that happens, a quick plunge to test the 200-day moving average (blue line) near $2,500 should not be ruled out.
For now though, we'll have to see what the data holds.
This article was written by Justin Low at www.forexlive.com. Read More Details
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