Gold/Euro Sellers Struggle for Market Control

27/01/2025

Market Overview

Gold prices edged lower against the euro during Monday’s Asian trading session, retreating from last week’s sharp gains. This movement follows the strengthening of the U.S. dollar, driven by the short-term tariffs imposed by President Donald Trump on Colombian imports. The stronger dollar has dampened the appeal of gold, weighing on its performance against other currencies, including the euro. Meanwhile, euro sentiment remains cautious ahead of key German economic indicators and European Central Bank (ECB) developments.

Technical Analysis

In the hourly chart, Gold/Euro exhibits bearish momentum after forming a double-top pattern. The pair broke below a crucial support level at 2634.62, aligning with the lower half of the Bollinger Bands and trading beneath the 100-period moving average. This setup signals a continuation of the downward trend. Sellers have successfully pushed the price to the immediate support at 2631.43. However, sustaining a bearish move requires a decisive break below this key level. If sellers maintain control, subsequent targets are identified at 2627.36 and 2622.88.

Momentum indicators confirm the dominance of bearish forces. The RSI remains below the neutral 50 level, indicating strong selling pressure, while the MACD shows a widening gap below the signal line, reflecting increased bearish momentum.

On the flip side, buyers would need to reclaim the resistance levels at 2639.10 and the recent high of 2646.36 to invalidate the bearish outlook. Breaking above these levels would signal a potential reversal, putting the pair back into a bullish trajectory.

Key Technical Levels

Resistance Levels: 2634.62, 2639.10, 2646.36
Support Levels: 2631.43, 2627.36, 2622.88

Fundamental Factors

Gold’s recent decline is largely attributed to the stronger U.S. dollar, supported by renewed trade policies from the U.S. administration. The dollar’s strength often negatively impacts gold, as the two assets typically exhibit an inverse correlation. On the other hand, euro movements are expected to be influenced by critical German economic data due today. The Ifo Business Climate Index, which measures business sentiment and six-month expectations, will be closely monitored. Any deviation from expectations could significantly affect the euro’s trajectory.

Moreover, U.S. economic reports, particularly housing market data scheduled for release later today, may influence gold’s performance. Additionally, the spotlight remains on ECB President Christine Lagarde’s speech, as investors anticipate her insights on the central bank’s policy direction and the eurozone’s economic outlook.

Conclusion

Gold/Euro remains under short-term bearish pressure, with technical indicators supporting a downside continuation unless buyers reclaim control above 2639.10. Upcoming German business sentiment data and U.S. housing reports are expected to introduce additional volatility. Until a significant reversal occurs, the bearish outlook for this pair remains intact.