FX.co ★ XAU/USD. Analysis and Forecast

For the fifth consecutive day, gold is rising, reaching nearly a two-week high just below the psychologically significant level of $2700. Ongoing geopolitical risks continue to support the precious metal as a safe-haven asset, extending its weekly upward trend. Additionally, the fiscal stimulus policies of the newly elected U.S. President Donald Trump may again trigger inflationary pressures, providing another factor favoring gold as a hedge against inflation.

Sustained buying of the U.S. dollar, driven by expectations of inflation data, does not significantly impact demand for gold. This reflects the Federal Reserve's perceived inability to implement further rate cuts. Bulls in the XAU/USD pair disregard the prevailing risk-on sentiment, maintaining that the most probable direction for the precious metal is upward.

Gold may accelerate its upward movement once it decisively breaks above the psychologically significant $2700 level.

The breakout above $2665, which coincides with the 50-day simple moving average (SMA) on the daily chart, triggered bullish momentum. Additionally, technical indicators on the daily chart have regained positive momentum, supporting the outlook for further price growth in the precious metal. The current bullish trend in the gold market could be confirmed if the $2700 level is surpassed, potentially paving the way for higher price levels.

On the other hand, it is technically important to monitor the $2665 level, which has become a key support level following the overnight breakout. If the price falls below this level, the next significant support will be between $2635 - $2625. Below that lies the psychologically significant $2600 level. A decisive break below this point could expose gold to an accelerated decline toward the 100-day SMA, potentially revisiting last week's low. Failure to defend these levels would favor the bears, preparing the market for deeper losses.