- Gold prices attracted buyers for the fourth day in a row, rising to their highest level in more than a week.
- Geopolitical risks stemming from the Russia-Ukraine conflict benefit the safe haven XAU/USD.
- Rising U.S. bond yields could support the U.S. dollar and provide a ceiling for the low-yielding yellow metal.
Gold prices (XAU/USD) have maintained their bid tone heading into the European session, currently trading around the $2,660 level, or the 1-1/2-week high hit on Thursday. This marks the fourth consecutive day of positive movement, sponsored by geopolitical risks stemming from the worsening Russia-Ukraine war, benefiting safe-haven precious metals. Separately, a modest decline in the US dollar (USD) has also been a tailwind for commodities.
Still, rising U.S. Treasury yields, supported by expectations that President-elect Donald Trump's tariff proposals could spur inflationary pressures and limit the extent to which the Federal Reserve can cut interest rates, , which is a ceiling on the price of gold with no yield. Additionally, there is a prevailing risk-on mood, as evidenced by the generally positive tone in the stock market, so take some time off before making an aggressive bullish bet on the safe-haven XAU/USD. caution is required.
Gold price bulls maintain near-term leadership as Russia-Ukraine tensions stimulate demand for safe-haven assets
- Russian President Vladimir Putin's decision to lower the threshold for a nuclear attack has heightened geopolitical tensions, supporting safe-haven gold prices for a fourth straight day on Thursday.
- Investors appear convinced that the expansionary policy proposed by President-elect Donald Trump could accelerate inflation and force the Federal Reserve to slow the pace of its rate-cutting cycle.
- Additionally, a number of influential Fed officials have recently warned against further policy easing, which continues to support rising U.S. Treasury yields and keep the dollar at year-to-date highs.
- Federal Reserve Board member Lisa Cook said Wednesday that the central bank could be forced to pause rate cuts if inflation slows.
- Separately, Fed Governor Michelle Bowman said inflation appears to be stalling and the U.S. central bank should pursue a cautious approach to monetary policy.
- Meanwhile, Boston Fed President Susan Collins said further rate cuts were needed, but policymakers needed to proceed cautiously to avoid moving too soon or too late.
- Traders are currently pricing in a more than 50% chance that the Fed will lower borrowing costs at its December monetary policy meeting, according to CME Group's FedWatch tool.
- Benchmark 10-year Treasury yields rose Wednesday by the most in a week, a risk trend that could dampen price movements in safe-haven precious metals.
- Thursday's U.S. economic data will feature the usual weekly number of new jobless claims, the Philadelphia Fed's manufacturing index, and existing home sales data for the second half of the North American session.
- Investors will also be scrutinizing Fed policy makers' speech for clues on the future rate cut path that would push the USD higher and provide some stimulus to the non-interest rate XAU/USD.
Gold price could rise further towards next relevant hurdle around $2,670-$2,672
From a technical perspective, the intraday rally faces some resistance around the 50% retracement level of the recent pullback from October's all-time high. The aforementioned barrier is pegged around $2,660, and if gold prices rise above it, momentum could accelerate towards the $2,670-$2,672 congestion zone. With some follow-through buying, XAU/USD could aim to recover the $2,700 round figure.
On the flip side, the $2,635-$2,634 area, or 38.2% Fibonacci retracement level, appears to protect the immediate downside ahead of the $2,622-$2,620 area and the $2,600 round number. A solid break below the latter could leave gold prices vulnerable, exposing the 100-day simple moving average (SMA) around $2,557, with some intermediate support around the $2,570 zone. This is followed by last week's swing lows around $2,537-$2,536, a decisive break of which would be seen as another trigger for bearish traders and set the stage for further losses.
USD price today
The table below shows the percentage change of the US dollar (USD) against major currencies today. The US dollar was the strongest against the New Zealand dollar.
| USD | EUR | GBP | JPY | CAD | australian dollar | new zealand dollar | swiss franc | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.06% | -0.04% | -0.51% | -0.09% | -0.21% | 0.03% | -0.24% | |
| EUR | 0.06% | 0.02% | -0.44% | -0.03% | -0.14% | 0.09% | -0.18% | |
| GBP | 0.04% | -0.02% | -0.43% | -0.06% | -0.18% | 0.07% | -0.20% | |
| JPY | 0.51% | 0.44% | 0.43% | 0.41% | 0.31% | 0.52% | 0.27% | |
| CAD | 0.09% | 0.03% | 0.06% | -0.41% | -0.11% | 0.13% | -0.13% | |
| australian dollar | 0.21% | 0.14% | 0.18% | -0.31% | 0.11% | 0.24% | -0.03% | |
| new zealand dollar | -0.03% | -0.09% | -0.07% | -0.52% | -0.13% | -0.24% | -0.27% | |
| swiss franc | 0.24% | 0.18% | 0.20% | -0.27% | 0.13% | 0.03% | 0.27% |
The heat map shows the percentage change between major currencies. The base currency is selected from the left column and the quote currency is selected from the top row. For example, if you select USD from the left column and move along the horizontal line to Japanese Yen, the percentage change displayed in the box represents USD (base)/JPY (estimate).
