Gold: preparing for a breakout or a reversal? The dollar will decide

Expert market comment from senior analyst Alex Kuptsikevich of the FxPro Analyst Team: Gold: preparing for a breakout or a reversal? The dollar will decide
FxPro | 644天前

Gold lost 0.8% on Tuesday to $2037 due to the impact of a rising dollar after policymakers in Davos flagged overly optimistic expectations for an interest rate easing cycle.

Commentators are trying to find a link between hawkish comments from eurozone (not US) policymakers and the rise of the dollar. But we tend to see a technical pullback behind the USD strength after markets clearly jumped over their heads in their expectations, laying down rate cuts at every Fed meeting since the March meeting.

But in gold, another trend can also be highlighted. During the October-December price update of local highs, the RSI index on daily timeframes recorded a sequence of declining local peaks. This is a sign of bullish momentum exhaustion. We saw a similar one in March-May last year when a five-month downward trend followed the formal renewal of historical highs.

The price climbed a bit higher in October and experienced a powerful short squeeze at the start of last month. But since then, the market has been finding a balance of around $2040.

These are historically high levels, and the lull here may turn out to be both a period of consolidation before further growth impulse and the start of the bear market. The dynamics of the dollar, in this case, may turn out to be the final determining force.

Further strengthening of the dollar from current levels promises to significantly increase the pressure on gold, which is losing its attractiveness against the background of high yields on US bonds, supported by the growth of the US currency. A crucial intermediate stage in this case will be the level of $2020. The 50-day moving average, which has been a significant support level since November, is located there.

If the last impulse of the dollar is just short-term profit-taking, the gold bulls will have enough strength and liquidity to launch a new wave of price growth with the renewal of historical maximums and the final target above $2500.

By the FxPro Analyst Team

FxPro
类型: NDD
规则: FCA (UK), SCB (The Bahamas)
read more
Inflation in Focus as Traders Eye BoE’s Next Move | 22nd October 2025

Inflation in Focus as Traders Eye BoE’s Next Move | 22nd October 2025

Markets traded cautiously as investors awaited UK inflation data, a key driver for the Bank of England’s next move. The Pound held firm ahead of CPI, oil extended gains on improving demand, and the US Dollar stayed soft. Broader sentiment was steady as easing US–China trade tensions balanced inflation-driven uncertainty.
Moneta Markets | 2小时26分钟前
ATFX Market Outlook 22nd October 2025

ATFX Market Outlook 22nd October 2025

The U.S. Dollar Index climbed to a six-day high, buoyed indirectly by a weaker yen. Markets reacted to the election of conservative Sanae Takaichi as Japan’s first female prime minister, with speculation that fiscal expansion under her leadership could cloud the country’s interest rate outlook.
ATFX | 4小时44分钟前
Gold plummets on profit taking

Gold plummets on profit taking

Gold drops as traders decide to lock profits ahead of US CPI data - Yen falls as Takaichi becomes Japan’s next Prime Minister - Pound slides as well after weaker than expected inflation - Wall Street participants digest earnings results
XM Group | 5小时2分钟前