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Market Is Choosing Direction, Watch for Key Levels to Break
Commodity
Summary:
The direction of asset allocation may be shifting, posing challenges to gold's upward momentum.
Buy
TradingXAUUSD
EXP
4216.39
Entry Price
4346.00
TP
4170.00
SL
4197.91 -9.26 -0.22%
0
Point
Flat
4170.00
SL
CLOSING
4216.39
Entry Price
4346.00
TP
Fundamentals
In today's trading, gold prices fell to US$4,194, down 0.59%, retreating from recent highs.
Gold's upward momentum may face challenges if market sentiment improves next year and asset allocation shifts back toward risk assets.
Although current gold futures positions exceed long-term averages, they remain well below this year's peak levels, potentially signaling a cooling of market optimism following the strong rally at the beginning of the year. However, with inflation persisting despite the ongoing rate-cutting cycle, investors may still increase their allocation to gold.
Central banks' demand for gold is more structural in nature, as the U.S. fiscal deficit has been expanding and emerging market central banks hold relatively low proportions of gold in their foreign exchange reserves.
Technical Analysis
During Wednesday's European session, gold prices hovered near the lower end of their range. Despite mixed market sentiment, prices held above yesterday's low of US$4,163. Overall strength in equity markets was seen as a key factor weighing on the precious metal.
The current intraday high of US$4,230 has become a direct resistance level for bullish momentum. A break above this level would signal an early indication of further upward movement. The next resistance level stands at US$4,246; a breach of this threshold would mark the continuation of last week's rally and target the sell-off level at US$4,346.
On the other hand, should gold prices break below the US$4,182 threshold, the downward trend may continue. If yesterday's low of US$4,163 is breached, prices could test the US$4,100 level before ultimately falling to the converging support zone at US$4,075-US$4,073. This support area is formed by the 200 SMA in the 4H timeframe and the upward trendline established since late October.
Trading Recommendations
Trading Direction: Buy
Entry Price: 4205
Target Price: 4346
Stop Loss: 4170
Valid Until: December 20, 2025 23:55:00
Support: 4180, 4165, 4154
Resistance: 4220, 4228, 4239
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