22 Jan 2025

• Gold price scales higher for the third straight day amid the global flight to safety.
• Bets for more rate cuts by the Fed also benefit the non-yielding yellow metal.
• A modest USD bounce and the risk-on mood do little to cap the XAU/USD pair. 
• Gold prices (XAU/USD) continue their upward trajectory for the third consecutive day on Wednesday, surpassing the $2,750 mark and reaching their highest point since early November during the Asian trading session. The threatened tariffs by US President Donald Trump have emerged as a significant factor propelling investments towards this safe-haven asset. Additionally, expectations that the Federal Reserve (Fed) will implement two rate cuts this year further bolster the appeal of the non-yielding yellow metal.
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• The intraday gains appear largely insulated from the prevailing risk-on sentiment. Even a slight increase in US Treasury bond yields, which aids the US Dollar (USD) in recovering from a two-week low, has minimal impact on the optimistic outlook for Gold prices. Furthermore, the recent breakout above the $2,720 resistance level reinforces the potential for continued appreciation in the near term for XAU/USD.
• Shortly after taking the oath of office, US President Donald Trump announced his intention to implement 25% tariffs on Canada and Mexico, with the proposed start date for these tariffs set for early February. 
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• Trump's comments regarding tariffs raised alarms about a potential resurgence of a global trade war, leading to increased demand for safe-haven assets and propelling the price of gold to its highest point since early November. 
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• Additionally, indications of easing inflation in the United States have rekindled speculation that the Federal Reserve may consider rate cuts by the end of the year, resulting in a decline in US Treasury bond yields. 
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• This situation, combined with the ceasefire agreement between Israel and Hamas, as well as expectations that Trump may ease restrictions on Russia in exchange for a resolution to the Ukraine conflict, has contributed to a risk-on sentiment in the markets. 
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• During the Asian trading session on Wednesday, the US Dollar experienced a modest recovery, moving away from a two-week low that was revisited on Tuesday, which may limit gains for XAU/USD. 
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• Investors are now anticipating the forthcoming Bank of Japan decision on Friday, which has the potential to introduce volatility into the financial markets and impact the safe-haven precious metal. 
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• Furthermore, the release of flash PMI data is expected to provide new insights into global economic conditions and could offer significant momentum to commodities in the latter part of the week.
• From a technical standpoint, the recent breakout above the $2,720 supply zone has been interpreted as a new catalyst for bullish traders. The oscillators on the daily chart remain firmly in positive territory and have not yet approached the overbought level. Should the price surpass the $2,748-2,750 resistance, it is likely to facilitate further upward movement. Consequently, the Gold price may target the all-time high near the $2,790 mark reached in October 2024.
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• Conversely, any potential corrective pullback could be viewed as a buying opportunity, with support expected to hold around the $2,725-2,720 range. The next significant support level is identified near the $2,700-2,690 area; a decisive breach of this level could trigger aggressive technical selling, potentially driving the Gold price down to the $2,660 zone, and subsequently towards the $2,625 confluence. This confluence includes the 100-day Exponential Moving Average (EMA) and an ascending trend line originating from the November swing low, which is anticipated to serve as a crucial pivot point in determining the next directional movement for the XAU/USD.