Fed Pivot Opens Pathway for New Fresh Record, XAU/USD Levels

GOLD PRICE OUTLOOK

• Gold prices push higher and challenge critical resistance, supported by falling yields and a weakening U.S. dollar
• The Fed’s dovish pivot can be seen as a bullish catalyst for precious metals, but caution is warranted as markets are getting overextended
• This article analyzes XAU/USD’s technical outlook, examining major price thresholds worth watching in the coming days

Most Read: US Dollar Demolished by Fed’s Dovish Pivot, Tech Setups on EUR/USD and USD/JPY

Gold prices (XAU/USD) gained ground on Thursday, rising for the second consecutive trading session after the Federal Reserve embraced a dovish posture at the conclusion of its December monetary policy meeting on Wednesday afternoon, an unexpected outcome that triggered a substantial drop in U.S. Treasury yields and the U.S. dollar.

With bond yields and the greenback in free fall, precious metals may have more upside in the near term. In this context, it wouldn’t be surprising to witness bullion climb to new heights and possibly hit another record before the end of the year.

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Focusing on technical analysis, XAU/USD retains a bullish outlook, although its upward journey may encounter temporary setbacks. This means there could be transient pullbacks in the uptrend, especially if overbought conditions are reached. We are not there yet, but the 14-day RSI indicator is heading in that direction,

In terms of major levels to watch, resistance looms at $2,050. On further strength, the focus shifts to May’s peak near $2,075. Previous attempts to breach this barrier on a sustained basis have been unsuccessful, so history could repeat itself on a retest. However, if a decisive breakout materializes, a rally toward the 2023 swing high becomes a realistic prospect.

On the other hand, if upside momentum wanes and sellers spark a reversal, the first line of defense against a bearish attack appears at $2,010. Maintaining this floor is crucial; a failure to do so could reinforce downward pressure, exposing trendline support near $1,990. Below this threshold, all eyes will be on the 50-day simple moving average.

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GOLD PRICE TECHNICAL CHART

Gold Price Chart Created Using TradingView