- Summary:
- The Federal Reserve is expected to announce a 25 basis points cut on current interest rates, but a Trump presidency means there's more to it.
Gold price rose marginally on Thursday as traders waited for Fed interest rate announcement, a day after Donald Trump was confirmed as the US president-elect. The yellow metal traded at $2,666 at the spot market, up by 0.1 percent on the daily chart at the time of writing. However, the market sentiment is still largely pro-US dollar as Trump’s win is expected to usher an era of elevated inflation and high interest rates.
According to the CME FedWatch tool, 99 percent of traders expect the Federal Reserve to announce that it has slashed interest rates by 25 basis points later on Thursday. That will provide near-term support for gold prices, but the transition in the US means many investors will likely focus on the broader implications of a Trump presidency.
Trump’s protectionist policies characterised by tariff raises on imports, is expected to drive up inflation. That could favour gold as investors could need more of it to hedge against rising prices. On the other hand, his proclamation of brokering an end to the Russia-Ukraine war could ease the safe haven demand for the yellow metal.
Meanwhile US treasury bonds declined on Thursday ahead of the Fed interest rate announcement. Benchmark 10-year bonds were down by 2 basis points to 4.535 at the time of writing, bringing tailwinds to non-yielding gold. That will likely keep XAUUSD on the ascending trajectory in the near-term.
Gold price prediction
Gold price pivots at 2,661 and the buyers will be in control if the price action is kept above that level. The upward momentum will likely encounter the first resistance at 2,676, but extended control by the buyers could break above that level to test 2,687.
On the other hand, moving below 2,661 will signal control by the sellers. In that case, the first support will likely be at 2,653. However extended downward momentum could break below that level to invalidate the upside narrative and potentially test 2,643.
