Gold prices bottomed out and rebounded on Tuesday (November 26), falling to around $2605.13 per ounce at the beginning of trading, supported by the 2600 level and the 61.8% retracement level of previous gains. Currently trading around $2629.14 per ounce.

The initial decline was partly due to the continuation of overnight downward momentum, with overnight gold prices plummeting by over 3%. Israel and Lebanon may reach a ceasefire agreement, which has suppressed safe haven buying demand for gold; Another reason is that Trump announced that he would impose a 25% tariff on Canada and Mexico on his first day in office, causing a rapid short-term rise in the US dollar index and suppressing gold prices.

But the market soon realized that Trump's tariffs would also bring huge risks and uncertainties to the global economy. Gold prices quickly reversed their downward trend, recovering from the initial decline. Given the significant overnight drop in gold prices, investors need to be wary of further short-term rebound demand, although the rebound may be limited.

Main negative factors

In terms of geopolitics, four senior Lebanese sources said that US President Biden and French President Macron are expected to announce a ceasefire between Hezbollah and Israel soon.

Recently, the US economic data has been relatively strong, and the overall market expectation for the Federal Reserve to cut interest rates in December has weakened in the past two weeks.

Mixed long and short

After Trump threatened to impose a 25% tariff on all goods imported from Canada and Mexico to the United States, the US dollar rose against major currencies. The strengthening of the US dollar has reduced the attractiveness of gold to holders of other currencies. But tariff policies also increase market demand for safe haven purchases.

The day before, due to the nomination of the US Treasury Secretary, market concerns about trade cooled down, causing a sharp drop in the US dollar index and US Treasury yields, as well as a significant drop in gold prices. However, the US dollar index has now reversed all of Monday's declines.

Main benefits

Minneapolis Federal Reserve Chairman Neel Kashkari said on Monday that he is open to another rate cut next month.

Federal Reserve's Gulsby said on Monday that he expects the Fed to continue cutting interest rates to achieve the goal of neither restricting nor promoting economic activity.

The expectation of the Federal Reserve cutting interest rates in December has slightly rebounded from the previous day. According to the FedWatch Tool of the Chicago Mercantile Exchange, the market currently estimates that the possibility of the Fed cutting interest rates by 25 basis points in December is 55.9%, and about 53% on Monday.

The SPDR Gold Trust GLD, the world's largest gold exchange traded fund (ETF), announced on Monday that its gold holdings increased by 0.16% to 879.41 tons, and there has been no reduction in this position since November 16th.

In addition, the conflict between Russia-Ukraine conflict is still ongoing. The mayor of Kiev said on Monday that Kiev was attacked by several rounds of Russian drones. The Governor of Kursk, Russia, announced on Monday that Russian air defense forces have destroyed seven Ukrainian missiles.

Technical aspect

Daily level: Interwoven moving averages, MACD bonding, KDJ also in the middle position, with high short-term trend variability. Considering that Monday's bearish candlestick has swallowed up the bullish candlestick of the previous three trading days, the short-term trend is slightly bearish. Gold prices may once again test the support near the 100 day moving average, which is currently around $2565.76 per ounce.

The initial resistance above is around the 55 day moving average of 2656.7, and the resistance of the 21 day moving average is around 2667.48. If this position can be recovered, it will weaken the bearish signal in the future.

4-hour level: After a unilateral rise, there is a pullback, but it is supported by the key position of 61.8% retracement, which is around 2607.36. If it falls below this position, it may further fall towards the previous low of 2536.68. In the short term, there is also some support around 2580.

However, currently the Bollinger Bands are running horizontally after closing, and the support for the lower Bollinger Bands is also around the 61.8 retracement level. The K-line has recorded a cross star near the key support, and there are some opportunities for short-term gold prices to rebound and adjust, and even the possibility of regaining the upward trend. The key resistance is around the mid Bollinger Bands 2662.02. If this resistance is strongly broken, it will increase the bullish signal for the future market.

But if it cannot break through the resistance around 2650 (multiple resistance levels such as integer level, 38.2% retracement level of 2721-2605 decline), the gold price still faces further downside risks in the future.

Follow the future market

Traders will closely monitor the US consumer confidence data and Federal Reserve November meeting minutes to be released later that day, as well as the first revised US gross domestic product (GDP) and core personal consumption expenditure (PCE) price index to be released later this week.

Relatively speaking, the Federal Reserve cut interest rates by 25 basis points as scheduled at the November meeting, but the wording was not particularly dovish. Investors need to beware of the possibility that the meeting minutes may lean towards hawks. If this is the case, the US dollar may continue to rise, and gold prices face further downside risks.

In addition, it is necessary to continue to pay attention to relevant news on the geopolitical situation. From the current trend, the tension in the Middle East may tend to ease, which tends to suppress the safe haven demand for gold in the short term. However, the situation of the Russia-Ukraine conflict still exists.

Of course, investors need to continue to pay attention to Trump's related dynamic news, which may still provide some support for gold prices, but with greater uncertainty.

In addition, there were more economic data from the United States on Wednesday, especially the PCE data for October, durable goods orders, and changes in initial jobless claims. The current market expectation is slightly bearish on gold prices.

Conclusion: The short-term trend is highly variable, with a peak before 2650 and a tendency towards a volatile downward trend in the future.