XAUUSD Weekly Trading Analysis

Gold (XAUUSD) has experienced significant volatility in recent days, driven by a mix of geopolitical events, economic data, and shifting market expectations.

1. Impact of US Budget Deficit and Trade Wars
Rumors surrounding a potential reduction in the US budget deficit have placed downward pressure on gold prices. Adding to the uncertainty, looming trade wars have weakened the XAUUSD's previous advantages as a safe-haven asset.

Gold’s recent growth to the upper boundary of the $2,525–$2,725 range provided an opportunity for traders to open short positions. These positions are supported by expectations of an acceleration in the Personal Consumption Expenditures (PCE) Index to 2.6% in October. Such a development could trigger another sell-off in gold prices.

If high inflation persists, the Federal Reserve may halt its current monetary expansion cycle, potentially dragging the price of the precious metal even lower. Traders holding short positions from the upper boundary of the medium-term consolidation range are advised to maintain them, as further downward momentum is anticipated.

2. Political Developments: Trump’s Treasury Nomination
Gold suffered a sharp 3% drop following Donald Trump’s nomination of hedge fund manager Scott Bessent to lead the US Treasury Department. Bessent’s focus on stabilizing government finances through economic growth has shifted market sentiment. This move counters earlier expectations tied to the presidential election period, where traders anticipated slower US GDP growth, an expanding deficit, and rising national debt—all of which had previously buoyed XAUUSD.

3. Geopolitical Tensions and Gold's Strong Performance
Despite recent declines, the week ending November 23rd marked gold’s strongest performance since March 2023. Rising geopolitical tensions in Eastern Europe, particularly Ukraine’s use of Western weapons for long-range strikes against Russia and Moscow’s renewed nuclear threats, have heightened investor caution.

This shift in the "Trump trade" narrative has further complicated the outlook for gold. Market participants are now weighing the likelihood of Donald Trump’s economic and fiscal plans materializing, adding to uncertainty in the gold market.

Actionable Insights for Traders:

1. Short Positions:
   • Maintain existing short positions initiated near the $2,725 level, as further downward pressure is likely.
2. Monitor Key Economic Data:
   • Watch for the PCE Index data. A higher-than-expected reading could prompt another gold sell-off.
3. Geopolitical Developments:
   • Stay alert to developments in Eastern Europe and US political dynamics, as these factors heavily influence gold’s safe-haven appeal.