- Gold prices pop 0.50% at the early European conference on Monday.
- The right-wing extremist AFD won 20% of the votes, but the CDU booked a comfortable lead.
- The US dollar index falls. This is the opening room where the gold is expensive.
Gold prices (XAU/USD) have edged higher, trading near $2,945 on Monday, as the US Dollar weakens following the outcome of Germany’s federal election. Despite the far-right Alternative for Germany (AfD) securing 20% of the vote, the Christian Democratic Union (CDU) remains firmly in the lead with 208 seats, compared to AfD’s 152. This outcome strengthened the Euro (EUR), weighing on the US Dollar and supporting gold’s rise.
Looking ahead, investors are focusing on the upcoming release of the US Gross Domestic Product (GDP) data for the fourth quarter of 2024. With recent signs of slowing economic activity—such as Friday’s weaker Services Purchasing Managers Index (PMI)—another decline in US bond yields could occur. Market participants are also speculating that the Federal Reserve may consider easing monetary policy to stimulate growth and demand.
Daily digest market movers:
- Canadas Equinox Gold Corporation has sought to win a caliber collapse in a transaction that valued the total company at US$5.4 billion. This is the latest example of a transaction as miners benefit recorded prices.
- The US dollar weakened after several reports and economic data points last week revealed that US business activity slowed and consumer confidence waned, with expectations for inflation surging and markets pricing in more rate cuts by the Federal Reserve this year, Bloomberg reports.
- Conservative CDU leader Friedrich Merz was the winner of the German national election on Sunday. However, the outcome was faced with intensive pressure to give his bloc to power and quickly form the government. The AFD, the right-wing extremist, doubled the second-largest party with 20.8% of votes, but remained reported by the Financial Times.
Technical Analysis:
Traders are facing increased volatility as gold prices experience sharp fluctuations. With more banks predicting a climb to the $3,000 level, the risk grows that gold may fall short of this milestone. A similar situation occurred with the Euro (EUR/USD) earlier this year when widespread forecasts anticipated parity with the US Dollar, only for the currency pair to move higher instead.
For Monday, the key level to monitor remains the all-time high of $2,955. Before reaching that mark, initial resistance is seen at $2,951 (daily R1), while surpassing it could pave the way for a fresh record high, with the next resistance at $2,967 (R2).
On the downside, multiple support levels offer stability, starting with the daily Pivot Point at $2,934. If prices decline further, the next key support is at $2,918 (S1), aligning with Friday’s low. Should this level fail to hold, attention shifts to the psychologically significant $2,900 mark, reinforced by S2 support at $2,901.
