Gold prices experienced a moderate rise on Monday as traders analyzed the implications of Donald Trump’s inauguration as the 47th President of the United States. Amid thin trading conditions, the XAU/USD pair climbed 0.27%, reaching $2,709. This uptick coincided with a weaker US Dollar, driven by Trump’s inaugural address, where he tempered his stance on aggressive tariff policies.
Gold Price Movement and Key Factors
Gold’s increase aligned with a noticeable dip in the US Dollar Index (DXY), which fell to a nine-day low of 107.95 before rebounding slightly above the 108.00 mark. This decline in the dollar bolstered gold, as the commodity typically benefits from a weaker greenback.
During his speech, President Trump declared a national emergency on energy and the southern border, signaling significant shifts in US energy and immigration policies. While aiming to boost strategic oil reserves and increase exports, Trump also proposed stringent measures to address immigration issues.
Notably, the president softened his trade rhetoric, even as reports in The Wall Street Journal highlighted plans to assess US trade relationships with major partners, including China, Canada, and Mexico.
Gold Prices and US Economic Outlook
This week’s US economic calendar features several critical data points, including Initial Jobless Claims, S&P Global Flash PMIs, and housing statistics, which could influence gold prices further.
Gold’s rise comes as real yields, measured by the 10-year Treasury Inflation-Protected Securities (TIPS), remained stable at 2.20%. Meanwhile, geopolitical risks slightly eased after a ceasefire in the Middle East facilitated the release of hostages in exchange for prisoners.
Market sentiment suggests increasing expectations that the Federal Reserve will reduce interest rates twice by the end of 2025, with the first cut anticipated in June.
XAU/USD Technical Outlook
Gold prices are consolidating above the $2,700 mark but face resistance near the December 12 high of $2,725. Breaking this level could pave the way for buyers to challenge the psychological barrier of $2,750 and potentially target record highs of $2,790 and $2,800.
On the downside, if gold falls below $2,700, initial support lies at the January 13 swing low of $2,656. Further declines may test the confluence of the 50-day and 100-day Simple Moving Averages (SMAs) in the $2,642-$2,644 range.
Conclusion
As traders digest Trump’s first day in office, gold prices remain a key focus for market participants. The weaker dollar, coupled with shifts in US policy and global economic conditions, continues to provide support for the precious metal.
