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27/05/25
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Gold Prices Eye Rally Amid US Fiscal Uncertainty and Weaker Dollar
Gold prices are currently consolidating below the $3,350 level, with signs of increasing buying pressure. As anticipation builds for a Senate vote on the proposed tax reform bill by the Trump administration, the US Dollar and Treasury yields are facing downward trends. The technical indicators suggest that a sustained move above the $3,370-$3,375 range could signal a further rally in gold prices.
After experiencing a peak of $3,365 last Friday, gold is drawing renewed interest as traders await upcoming US economic data and developments in trade negotiations. The current momentum indicates a possible resurgence toward record highs, supported by a weaker US Dollar resulting from concerns over fiscal policy. The House of Representatives recently passed a tax bill projected to substantially increase the federal deficit, which adds to worries regarding the financial stability of the US economy.
Investor sentiment remains cautious amid fears about the US’s fiscal health, leading to reduced demand for US assets, including the Dollar. This cautious outlook is compounded by a recent downgrade of the US credit rating. Additionally, investors are reconsidering their positions in light of the Federal Reserve’s dovish stance, which continues to support gold as a non-yielding asset.
Market dynamics are further influenced by geopolitical factors, such as ongoing tensions involving Russia, Ukraine, and Iran. This backdrop creates additional support for gold prices as investors look for safe-haven assets. Upcoming releases of Durable Goods Orders and Consumer Confidence data are expected to impact the performance of the US Dollar, while the tax discussions and trade headlines will likely steer gold’s movements.
Short-term technical indicators suggest that gold buyers may soon regain dominance, particularly as the Relative Strength Index remains above neutral levels. For a sustained upward trend, a breakthrough above the $3,370-$3,375 range is essential. Key resistance levels have been identified at $3,400 and $3,435, while support is expected near $3,295 and potentially $3,232 if bearish momentum increases. Should the situation deteriorate further, the 50-day moving average at $3,213 could come into play.
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