- Summary:
- Gold price has returned to the upside, taking cues from the stock market as investors bet on US tech industry to overcome DeepSeek onslaught.
Gold price was up in the European session on Tuesday as stock markets recovered from Monday’s rout. Spot gold traded at $2,747 at the time of writing, up by 0.1% on the daily chart. The precious metal was dragged by the stock market’s FUD sentiment yesterday as China’s DeepSeek sent shockwaves across the tech industry.
However, the commodity picked cues from stocks on Tuesday as the broader market recovered, the narrative being that DeepSeek’s impact on the market is likely blown out of proportion. US PresidentDonald Trump’s push for interest rate cut has also thrown a spanner in the works ahead of the Fed’s interest rate decision on Wednesday.
While the central bank’s decision making is independent on Trump’s, the market sentiment signals that some traders view the president’s expression as pressure on FOMC members.
Trump has recently announced his intention to initiate tariff plans against imports from certain key trading partners, a factor that could keep inflation elevated. As a result, the Fed will likely retain the 4.5% rate, a move that could subdue gold price upside. The higher-for-longer interest rate sentiment has driven the yields on benchmark 10-year US treasury bonds up by 4 basis points to 4.569% as of this writing.
Also, the calming of war rhetoric in the Middle East and between Russia and Ukraine has denied gold its geopolitical premium. Friday’s release of Personal Consumption Expenditure (PCE) data will provide a clearer guidance for inflation and interest rates, and inject fresh volatility into gold price.
Gold Price Prediction
Gold price pivots at $2,739 and action above that level validates further upside as signaled by the Money Flow Index (MFI) indicator. XAUUSD will likely meet the first resistance at $2,751. However, an extended control by buyers will clear that mark and potentially test $2,763.
Alternatively, the momentum could shift to the downside if gold price breaks below $2,739. In that case, the XAUUSD pair will likely find the first support at $2,730. Breaking below that level will invalidate the upside narrative, and potentially take the metal lower to test $2,724.
