Gold Outlook: Dollar Rally, FOMC, and the Trump Effect
Gold Outlook: As market certainty grows post-U.S. elections and the dollar rallies in response to potential inflation risks, gold has faced a sharp pullback. The yellow metal, previously in overbought territory on its monthly timeframe, has plunged nearly 100 points, recharging momentum ahead of tonight's FOMC meeting.
Share this:
Key Events
- Dollar Rally May Be Losing Momentum: Despite a bullish dollar rally post-election, it may be approaching a key resistance level as the FOMC decision nears
- Gold's Nearly 100-Point Plunge: Following the election results, gold's steep drop has intensified market anticipation for tonight's FOMC meeting
- Middle East Geopolitics: Resolutions are unlikely before 2025, sustaining some haven demand for gold
- Trump's Impact on Trade and Geopolitical Stability: Concerns about trade wars and heightened global tensions weigh heavily on economic outlooks worldwide
Trump Victory and Geopolitics
A Bloomberg opinion recently stated, "America deserves Donald Trump, the world doesn’t," reflecting global concerns over the economic and geopolitical impacts of Trump's policies as he heads toward the White House by 2025. Domestically, his inflation-driven growth agenda may push rates higher, while fears of trade conflicts and inflation risks add to global uncertainty.
Initially, these concerns boosted gold’s appeal, but as political uncertainty settled with Trump’s win, gold slipped below 2700. Meanwhile, unresolved Middle Eastern tensions, unlikely to ease before 2025, may continue to support upside risks for both gold and oil.
FOMC Meeting
The FOMC decision is a critical factor amid volatile fundamentals for the U.S. dollar and broader markets. While the Bank of England is expected to cut rates by 25 bps, the Fed may face greater challenges balancing a volatile labor market, persistent services inflation, and Trump’s agenda of tax cuts, tariffs, and spending hikes.
The latest ISM Services PMI, revisiting 2022 highs, adds further complexity to the Fed’s rate path amid inflationary pressures.
Technical Analysis: Quantifying Uncertainties
Gold Outlook: 3-Day Time Frame
Source: Tradingview
Gold remains within a primary uptrend that began at the October 2023 low, with the recent uptrend from the June 2024 low of 2293 respecting a parallel channel. This channel aligns with the pre-election high of 2790 and the subsequent post-election drop to 2643, forming a critical support zone at the bottom end of the 2600 range.
This area intersects with the one-year uptrend’s consecutive higher lows, suggesting potential for either a breakout or a deeper correction. The scenarios are the following:
Bullish Scenario: A close above 2790 could propel gold’s uptrend towards 2890 and 3050, marking a continuation of the broader uptrend.
Bearish Scenario: a close below 2600 could extend gold’s drop towards 2530 and 2480, signaling a deeper correction phase.
--- Written by Razan Hilal, CMT – on X: @Rh_waves
Related tags:
The complete CFD trading experience
Award-winning platforms, competitive spreads, low commissions and dedicated support.
We live and breathe the markets and are dedicated to helping traders realise their ambitions as we continue to set the industry bar.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
Gold Update: XAU/USD Remains Under Pressure Even After the NFP Report
As the trading week comes to an end, weakness around gold price action remains evident in the short term. This can be seen in the performance of the past two sessions, where the metal has declined by approximately 0.3%. Although the move has not been particularly aggressive, it highlights that buying pressure continues to struggle to regain control of the market.
Gold Price Forecast: XAU/USD Plunges 12.4% Toward Critical Support 10 1 2026
Softer inflation has revived expectations for a Fed pause, but Friday’s payrolls could put gold’s recovery prospects to the test.
NFP Preview: Can the Jobs Report Overcome the Bond Market Meltdown Too?
Traders and economists expect the NFP report to show that the US created 90K net new jobs, with average hourly earnings rising 0.3% m/m (3.1% y/y) and the U3 unemployment rate at 4.1% - see what the leading indicators are suggesting!
StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation.
StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.