Gold prices climbed nearly 1% on Wednesday, reaching as high as $3,393 before pulling back to test key support near $3,364. The rally was driven by a combination of weaker-than-expected U.S. economic data, falling Treasury yields, and a notable drop in the U.S. Dollar Index (DXY), which fell 0.5% on the day.
The softening dollar made gold more attractive to overseas buyers, while a decline in 10-year Treasury yields added to the metal’s safe-haven appeal amid mounting geopolitical tensions.
Weak Economic Data Spurs Defensive Sentiment
Investor sentiment turned defensive following the release of the ISM non-manufacturing PMI, which fell to 49.9—indicating contraction in the U.S. services sector for the first time in 12 months. Meanwhile, the ADP employment report showed the slowest pace of private sector job growth in over two years.
“There’s still plenty of upside for gold,” said Daniel Pavilonis, senior market strategist at RJO Futures. “With ongoing tensions involving Russia, Ukraine, Iran, and China, investors continue to seek the safety of gold. Even though momentum has slowed, demand remains resilient.”
Technical Setup: Gold Holding Above Key Fibonacci Support
Gold’s rally from the May 30 low of $3,271 has so far held up well. After peaking just shy of recent highs, prices retraced to $3,364—a level that coincides with the 23.6% Fibonacci retracement and a rising trendline from the May lows.
The MACD histogram has turned red, indicating fading momentum
A spinning top followed by a potential evening star suggests market indecision
Prices are hovering just above the 50-period exponential moving average (EMA) near $3,350
Despite these cautionary signals, the broader uptrend remains intact. However, a close below the trendline support could open the door to deeper retracements toward $3,332 or even $3,317, corresponding to the 38.2% and 61.8% Fibonacci levels, respectively.
Market Outlook: Support Zone Key Ahead of Jobs Report
All eyes now turn to Friday’s U.S. nonfarm payrolls report, a key catalyst that could determine gold’s next move. For now, the $3,350–$3,364 support zone remains critical for sustaining bullish momentum.
With geopolitical tensions high and economic data showing signs of weakness, gold continues to serve as a barometer of investor unease. Should the precious metal hold above current support, a break above $3,400—a key psychological level—could be within reach in the near term.
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