Gold extended modest gains during the Asian session on Wednesday, remaining within a multi-day-old trading range. XAU/USD held comfortably above the rising 200-period Exponential Moving Average (EMA) near $4,258, signaling intraday bullish support. Technical indicators confirm cautious optimism: the MACD line sits above its signal line, though the histogram contraction points to temporary cooling, while the RSI near 60 suggests upside potential without overbought conditions.
Sustaining levels above the $4,300 intraday pivot could open the door for further gains, while retracements are likely to find support near the 200-EMA. Traders eyeing a breakout will look for MACD histogram widening as a confirmation of renewed momentum, potentially unlocking a directional move higher toward the $4,350–$4,360 zone.
Fundamental Drivers: Fed Dovishness and Economic Risks
Gold’s stability is underpinned by defensive market sentiment amid global economic concerns. Fears of an AI bubble burst and weakening data from major economies continue to favor the non-yielding yellow metal.
Recent data highlights these pressures:
- China’s industrial output rose 4.8% YoY in November, the slowest pace since August 2024
- Retail sales grew only 1.3%, the weakest since December 2022
- US Nonfarm Payrolls added 64K jobs in November, surpassing the 50K forecast, but October payrolls were revised down by 105K
- US unemployment climbed to 4.6%, the highest since September 2021
These indicators, combined with muted wage growth (+0.1% in November) and flat US retail sales in October, strengthen expectations for future US Federal Reserve rate cuts. Investors are also factoring in Trump’s consideration of Christopher Waller for Fed Chair, with markets anticipating dovish policy and further rate reductions.
Market Outlook and USD Influence
While gold benefits from risk-off sentiment and dovish Fed expectations, the US Dollar has staged a modest rebound from its October lows. Any USD strength may cap XAU/USD upside in the short term, making a confirmed breakout above the current trading range critical for directional clarity.
Key market considerations include:
- Thursday’s US consumer inflation release as a potential gold catalyst
- Speeches from influential FOMC members providing guidance on rate-cut trajectory
- Technical support at $4,258 EMA and resistance at $4,300–$4,305
Overall, the combination of defensive risk sentiment and expected Fed easing favors gold bulls. However, traders are advised to wait for a sustained break above the multi-day range before committing to aggressive positions. The path of least resistance remains upward, but confirmation from key economic data will likely dictate the next major move in gold prices.
