Gold prices are leveling off as they remain stuck in congestion after New York Fed President John Williams contradicted Chairman Powell on the Fed’s strategy pivot. This article analyzes the technical prospects of XAU/USD, analyzing pivotal price thresholds that could act as support or resistance mechanisms in the coming days.
The pushback from Williams may be more of an attempt at damage control than a definitive reversal of the existing strategy.
The absence of a complete “pivot” reversal indicates that bond yields and the dollar are likely to continue their downward trajectory as traders anticipate the easing cycle. This easing is expected to begin at some point in the first quarter of 2024, which could mean further upside for precious metals and possibly the establishment of a new record high for gold prices.
In terms of major price thresholds worth watching, initial resistance appears at $2,050, followed by May’s peak around $2,075. Past attempts to breach these levels on a sustained basis have been unsuccessful, indicating that history could repeat itself on a retest. However, in the event of a clear breakout, a rally toward the 2023 swing high becomes a plausible scenario. On the flip side, if sellers return in droves and trigger a meaningful reversal, the first line of defense against a bearish assault is located near $2,010. Safeguarding this floor is imperative; a failure to do so could reinforce selling pressure, exposing trendline support near $1,990. Below this level, scrutiny will shift to the 50-day simple moving average.
