Gold’s Rebound Signals Opportunity Amid Mixed Market Forces

Gold rebounded from a low of $2,536.59, with a Hammer candlestick suggesting further upside. While the 100-period EMA signals an uptrend, mixed Momentum and RSI indicators urge caution. Key resistance levels are $2,642.75, $2,685.40, $2,744.21, and $2,789.90, with support at $2,594.88 and below.
Fundamentals point to Gold’s appeal as a hedge amid potential inflation and deficits under Trump, but strong dollar and equity rallies pose challenges. Central bank buying and robust mine output offer support, though investor sentiment remains cautious.

Wednesday 09:00 am (GMT+2) – UK: CPI y/y (GBP)
Thursday 15:30 (GMT+2) – USA: Unemployment Claims (USD)
Friday 09:00 am (GMT+2) – UK: Retail Sales m/m (GBP)
Friday 10:15 am (GMT+2) – Europe: French Flash Manufacturing PMI (EUR)
Friday 10:15 am (GMT+2) – Europe: French Flash Services PMI (EUR)
Friday 10:30 am (GMT+2) – Europe: German Flash Manufacturing PMI (EUR)
Friday 10:30 am (GMT+2) – Europe: German Flash Services PMI (EUR)
Friday 11:30 am (GMT+2) – UK: Flash Manufacturing PMI (GBP)
Friday 11:30 am (GMT+2) – UK: Flash Services PMI (GBP)
Friday 15:30 (GMT+2) – Canada: Retail Sales m/m (CAD)
Friday 16:45 (GMT+2) – USA: Flash Manufacturing PMI (USD)
Friday 16:45 (GMT+2) – USA: Flash Services PMI (USD)

After declining by 8% and reaching a low of $2,536.59 per troy ounce, Gold has rebounded off this low, driven by a Hammer candlestick reversal pattern, which suggests potential for further appreciation. The 50-period Exponential Moving Average (EMA) remains above the 100-period EMA, indicating an overall uptrend.
However, the Momentum oscillator and the Relative Strength Index (RSI) are sending mixed signals. The Momentum oscillator is below the 100 threshold, while the RSI is also below 50, indicating a downtrend.
If the upward momentum continues, the first resistance level is estimated at $2,642.75. Conversely, if bearish sentiment prevails, traders may focus on the support level at $2,594.88.

If buyers maintain control of the market, traders may shift their focus to the following four potential resistance levels:
2642.75: The first level of resistance is seen at 2642.75, which reflects a trough marked on November 7.
2685.40: The second resistance level is observed at 2685.40, which aligns with the swing high from September 26.
2744.21: The third price target is established at 2744.21, which corresponds to the weekly resistance, R2, calculated using the standard Pivot Points methodology.
2789.90: An additional price objective is projected at 2789.90, mirroring an all-time high from October 30.

If sellers take control of the market, traders may focus on the following four key support levels:
2594.88: The initial support level is established at 2594.88, representing the weekly Pivot Point, PP, calculated using the standard methodology.
2536.59: The second support level is positioned at 2536.59, aligning with a daily low from November 14.
2503.84: The third downside target is noted at 2503.84, corresponding to the weekly support, S1, calculated using the standard Pivot Points methodology.
2471.75: An additional downside target is determined at 2471.75, reflecting the trough marked on September 4.

Donald Trump’s presidential win is seen as medium-term bullish for Gold, driven by potential inflation, tax cuts, and rising deficits, according to John Reade of the World Gold Council. Concerns about the weaponization of the US dollar and global geopolitical tensions enhance Gold’s attractiveness as a safeguard against uncertainty.
However, Gold’s performance faces challenges from a strong dollar, equity rallies, and historically lower Republican-era gold demand. Recent outflows from gold ETFs highlight market caution, though central bank purchases and US deficit concerns may sustain demand.
Gold equities show promise, with improved capital discipline and potential for higher returns, but investor interest remains subdued, particularly in junior mining stocks. Despite cost pressures, healthy margins at current prices and robust mine output signal resilience, though resource challenges constrain long-term production growth.

In conclusion, Gold’s outlook remains balanced between bullish technical signals and cautious fundamentals. While a Hammer candlestick and an uptrend in moving averages suggest the potential for further gains, mixed Momentum and RSI indicators highlight lingering uncertainties. Resistance levels at $2,642.75 and above may test upward momentum, while support at $2,594.88 and below could anchor bearish sentiment.
Fundamental drivers such as inflationary pressures and central bank purchases support Gold’s appeal as a hedge, but challenges like a strong dollar, equity rallies, and cautious investor sentiment temper expectations. The market’s trajectory will likely depend on evolving economic data and global geopolitical developments.