Gold prices sharply retreat after hitting an all-time high

The precious metal is relinquishing its record levels due to the robustness of the U.S. dollar

By Raed Alkhedr | @raedalkhedr | 5 December 2023

Gold prices retreat
  • The U.S. dollar is on the rise against major currencies and commodities.

  • Geopolitical tensions are resurfacing in the Middle East.

  • Anticipation of the U.S. Federal Reserve easing its monetary policy in the first half of 2024.

- Key economic developments impacting the gold trend

Gold prices took a dip in Tuesday's trading session as the U.S. dollar gained ground against most major currencies, prompting the precious metal to relinquish its previously achieved all-time high.

Having soared past $2100 per ounce, gold had reached an unprecedented peak following a statement from Federal Reserve Chairman Jerome Powell that instilled confidence among traders. Powell's remarks suggested the Fed might halt interest rate hikes and potentially ease its monetary policy in the first half of 2024. Furthermore, heightened geopolitical tensions in the Middle East played a substantial role in driving up the value of gold.

Federal Reserve member Christopher Waller hinted at the possibility of reducing interest rates if inflation continues to decline. On the other side of the coin, markets are eagerly anticipating critical economic data this week, especially U.S. jobs data, which could influence expectations regarding U.S. interest rates.

The precious metal began the second session of the week with a modest increase, hovering around $2033 per ounce.

- Key pivot and technical levels influencing gold movements:

Gold successfully breached the $2075.00 resistance level during yesterday's session, after hitting its highest historical peak, but quickly retraced to trade around $2020.00.

The ongoing decline is likely to extend to test the $2000.00 support level. A break below this level may lead to a further decline, testing the $1932.00 level.

If gold manages to surpass the $2075.00 resistance level and maintains stability above it, this could contribute to additional upward movement toward $2150.00. Surpassing this level may extend the rise to the $2200.00 level.

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