- Gold prices have no clear direction and are influenced by a combination of forces.
- Non-dovish Fed bets are supporting the USD and creating a headwind for XAU/USD.
- Trade war concerns, geopolitical risks and lower U.S. Treasury yields are providing some support.
Gold prices (XAU/USD) fluctuated in a narrow range during Tuesday's Asian session, failing to take advantage of the previous day's rebound from around $2,620. Expectations that the US Federal Reserve's dovish stance will become less dovish have attracted follow-through buying in the US dollar (USD), proving to be a key headwind for the low-yielding yellow metal. . That said, concerns over President-elect Donald Trump's tariff plans, persistent geopolitical uncertainty and subdued U.S. Treasury yields are providing some support for commodities.
Traders also appear to be passive, choosing to wait for further clues about the Fed's rate cut path before taking positions on the next move in the direction of gold prices. Therefore, market attention will remain riveted on key US macro announcements this week, including Friday's Nonfarm Payrolls (NFP) report. Separately, Fed Chairman Jerome Powell's speech regarding the outlook for US interest rates will be of interest. This, in turn, will play an important role in influencing the short-term USD price movement and providing some meaningful stimulus to XAU/USD.
Gold price traders wait for Fed rate cut before betting on new direction
- The U.S. dollar looks set to accelerate its overnight recovery from multi-month lows amid growing expectations that the Federal Reserve will keep interest rates high for an extended period of time, hurting gold prices. It is said that
- Investors remain concerned that President-elect Donald Trump's tariff plans could trigger a second wave of global trade wars, which could be a tailwind for safe-haven precious metals. .
- The Institute for Supply Management's (ISM) Manufacturing Purchasing Managers' Index (PMI) rose to 48.4 in November due to expectations for favorable corporate policies from the incoming Trump administration.
- CME Group's FedWatch tool shows there is a nearly 75% chance that the U.S. central bank will cut borrowing costs by 25 basis points at its monetary policy meeting later this month.
- Benchmark 10-year US Treasury yields are hovering near their lowest levels since late October, further contributing to capping the downside in the low-yielding XAU/USD.
- Russia fired at least 60 North Korean missiles at Ukraine. North Korean leader Kim Jong Un has vowed that his country will always support Moscow until Russia achieves a major victory in Ukraine.
- Investors are eagerly awaiting this week's key US macro announcements and speech from Fed Chair Jerome Powell, which could impact the US interest rate outlook and move commodity prices.
- Tuesday's U.S. Economic Report will release jobs data from the Job Openings and Labor Turnover Survey (JOLTS), but the focus will remain on Friday's Nonfarm Payrolls (NFP).
Gold price remains fragile, affected by sharp decline in uptrend channel
From a technical perspective, Monday's break below the four-day-old ascending channel was seen as an important trigger for bearish traders. That said, the mixed oscillators on the daily/4-hour chart and the potential for overnight pullbacks warrant some caution before heading to any meaningful downside. However, any positive movement above the $2,650 area could face resistance near last Friday's swing high, i.e. near $2,666. The next relevant hurdle is set around the $2,677-$2,678 zone, above which gold prices could aim to regain the $2,700 round figure.
Conversely, an overnight trough around $2,622-$2,621 now appears to be protecting the near-term downside ahead of the $2,605-$2,600 region. Some follow-through selling could expose the 100-day simple moving average (SMA), which is currently near the $2,577 zone. A convincing break below the latter level should pave the way for a fall towards November's swing lows, i.e. around $2,537-$2,536.
