XAUUSD Analysis

Introduction

XAU/USD represents the price of gold measured against the US Dollar and is one of the most widely followed commodities in the world. Gold is viewed as a safe-haven asset, and its price tends to rise during periods of economic uncertainty, geopolitical risks, or financial crises. The price of gold is inversely correlated with the strength of the US Dollar, as a weaker dollar generally makes gold cheaper for foreign investors. Key drivers of gold prices include inflation expectations, real interest rates, central bank policies (especially the Federal Reserve), and global economic and geopolitical events. Gold is often seen as a hedge against inflation and a store of value during market volatility.

Fundamentals and Interest Rates

The policy is with the current Interest rate 0%. Latest change was 0%.
On that side the Federal Reserve policy is Dovish and (FED) has set its interest rate to 4.5% by latest change, Dec 18, 2024 (-25bp).
(FED) Higher interest rates generally lead to higher returns on investments denominated in USD. This tends to attract foreign capital into USD assets.

Based on the economic and macro fundamental data, The Fundamental Bias of XAU is Weak Bullish and for the USD is Moderate Bearish.
Ziwox considering Moderate Bullish bias for this asset and we anticipate long-term price increases. and Fundamental Score for USD is -3. So, base on the Fundamental Score, we predict mid-term downside price movement.

Market Overview & Performance

In the current trading session, "London & New York", Market risk sentiment is Classic Risk-ON. The Australian dollar and New Zealand Dollar recorded the strongest performance, while the Gold and Switzerland Frank are weakest so far.

Currencies performance vs US dollar "USD"
Gold "XAU", recorded a -2.58% decrease against us dollar.
Euro "EUR", performance has been -0.62% down so far
Pond "GBP", performance has been -0.37% down as of now
Australian dollar "AUD", has risen by 0.74%
New Zealand dollar "NZD", has risen by 0.27%
Japanese YEN "JPY", experienced -0.72% fall
Swiss franc "CHF", experienced -1.11% fall so far
Canadian dollar "CAD", has lost -0.23%
Market risk sentiment is ON, This means Investors embrace risk, driving demand for riskier assets and higher-yielding currencies while safe-haven assets weaken.

Market Sentiment and Positioning

XAU COT (Commitments of Traders):

Institutions Net Position on >Gold is 202210 included 271707 long, 69497 short and 1495 position changed from last week.
So they mainly have a bullish view on this asset and bought XAU for higher prices in long-term.
Last week 1495 repositioning Indicates that they are optimistic about higher prices in mid-term.

USD COT (Commitments of Traders):

Institutions Net Position on >U.S. Dollar Index is 1828 included 15722 long, 13894 short and -1085 position changed from last week.
So they mainly have a bullish view on this asset and bought USD for higher prices in long-term.
Last week -1085 repositioning Indicates closing positions, short-term profit-taking, or a general pessimism about prices.

Retail Traders:

Crowd traders or Retail traders are bullish on the XAUUSD with 49% 51% ratio. 15736 long pos and 11637 short position.
We generally adopt a contrarian approach towards crowd sentiment and we give probability XAUUSD prices may continue to rise.

Technical Levels and Support/Resistance

The XAUUSD pair is approaching a critical technical support level near 3226.39.
Technical trend is Sell, So If the pair continues to weaken, this support could become a significant area to watch for potential reversal or consolidation.
On the upside, there is key resistance near 3431.17. Technically, If the pair continues to the upside, this resistance level could become a significant area to watch for sell entery potential.