As the XAU/USD chart shows, last week gold prices fell sharply, interrupting the previous upward trend. This decline was driven by two main factors:

→ End of the US government shutdown. This is believed to have reduced short-term economic risks and lessened demand for gold as a “safe-haven” asset.

→ Hawkish statements from Federal Reserve officials, which lowered market expectations for rate cuts. This pushed up US Treasury yields, traditionally putting downward pressure on non-yielding assets like gold.

This week, the market is awaiting a wave of delayed US economic reports that were postponed during the shutdown, including:

→ Labour market data (Non-Farm Payrolls)
→ Inflation data (CPI)

These releases are expected to give traders greater clarity on the future trajectory of Fed interest rates.

Technical Analysis of XAU/USD

From a technical perspective, the price is currently trading at the intersection of two key lines:

→ Resistance line from the upper boundary of the descending channel originating at the all-time high. Buyers attempted to break through this level last week but were unsuccessful.

→ Support line from the lower boundary of the ascending channel, in place since early autumn.

Given the above, it is reasonable to suggest that:
→ the market is in a balanced position, with traders adopting a wait-and-see approach;
→ a breakout from the symmetrical triangle could indicate the direction of the next significant move in gold prices.

Start trading commodity CFDs with tight spreads. Open your trading account now or learn more about trading commodity CFDs with FXOpen.

This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.