- Gold prices are struggling to capitalize on modest intraday gains amid mixed fundamental indicators.
- Expectations that the Fed will ease its dovish stance and rising US Treasury yields are capping the rise in XAU/USD.
- Geopolitical risks, trade war concerns and expectations for Fed rate cuts could support precious metals.
Gold prices (XAU/USD) lost most of their intraday gains in early European trading on Friday, retreating to the lower end of the daily range. U.S. Treasury yields continue to rise as market confidence grows that the Federal Reserve will take a cautious stance on lowering interest rates, as efforts to cut inflation to its 2% target show signs of slowing. is supporting. This will help the US dollar (USD) maintain its gains recorded over the past week or so at monthly highs, acting as a headwind for the low-yielding yellow metal.
However, any significant downside for gold prices appears to be limited as traders may choose to refrain from aggressive bets and stay on the sidelines ahead of the much-anticipated two-day FOMC policy meeting starting next Tuesday. is. Separately, geopolitical risks stemming from the Russia-Ukraine war and tensions in the Middle East, as well as concerns about US President-elect Donald Trump's tariff plans, could also support safe-haven bullion. This calls for some caution before taking a position on an extension of the sharp retracement decline from the previous day's five-week high.
Gold prices lack bullish conviction as US bond yields rise
- Ukraine fired a US-supplied missile targeting a strategic location deep inside Russian territory. Meanwhile, Russian forces are closing in on the key city of Pokrovsk in eastern Ukraine after a month of intense fighting.
- Israel announced Thursday that its forces will remain in occupied Syrian territory until a new force is established to meet security demands and fill the vacuum left by the fall of the Syrian regime.
- This marks a significant escalation in geopolitical tensions, with some of the flight funds flowing into gold prices amid speculation that the Federal Reserve will lower borrowing costs at the end of its December meeting. There is.
- The market now appears to have fully priced in the Fed's move to cut interest rates by 25 basis points next week, as there were no major upside surprises in the latest US consumer inflation data released on Wednesday.
- The U.S. Bureau of Labor Statistics reported Thursday that the main producer price index (PPI) rose 0.4% in November, with the annual rate of increase accelerating to 3% during the reporting month from 2.6% in October.
- The annual core PPI rose 0.2% in November to 3.4% compared with the same period a year ago, stronger than expected and indicating that progress towards lowering inflation to the 2% target has stalled.
- This, along with expectations that US President Donald Trump's expansionary policies will boost inflation, suggests that the Fed will take a more cautious stance on interest rate cuts going forward.
- Expectations that the Federal Reserve will become less dovish continue to push up US Treasury yields, helping sustain the US dollar's weekly rise to new monthly highs, keeping the low-yielding yellow metal in check There is a possibility that
- Investors are eagerly awaiting next week's key FOMC policy decision for clues on the outlook for US interest rates. This will drive demand for the USD and provide meaningful stimulus to XAU/USD.
Gold price needs to fall below $2,675 for bears to take control
From a technical perspective, any further rally above the $2,700 mark will likely face resistance near $2,725-26, or the monthly highs hit on Thursday. A subsequent rally could push gold prices to $2,735, an intermediate hurdle on the way to the $2,748-$2,750 supply zone. The next relevant barrier is set around the $2,775 area, which bulls could push above to challenge the all-time high near $2,800 touched in October.
On the contrary, the $2,675-$2,674 area appears to be emerging as strong support for the time being. However, a solid break below this would prompt a technical sell-off and push further toward the $2,658-$2,656 confluence, which is comprised of the 50-period and 200-period simple moving averages (SMAs) on the 4-hour chart. This could pave the way for losses. The latter should serve as an important key point, and if it breaks decisively, gold prices could fall further towards the $2,632-$2,630 area on the way to the $2,600 big-digit mark. there is.
USD price this week
The table below shows the percentage change of the US dollar (USD) against major currencies this week. The US dollar was the strongest against the Japanese yen.
| USD | EUR | GBP | JPY | CAD | australian dollar | new zealand dollar | swiss franc | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.97% | 0.87% | 2.03% | 0.49% | 0.30% | 1.30% | 1.69% | |
| EUR | -0.97% | -0.09% | 1.18% | -0.40% | -0.58% | 0.40% | 0.79% | |
| GBP | -0.87% | 0.09% | 1.06% | -0.31% | -0.49% | 0.49% | 0.88% | |
| JPY | -2.03% | -1.18% | -1.06% | -1.54% | -1.61% | -0.84% | -0.25% | |
| CAD | -0.49% | 0.40% | 0.31% | 1.54% | -0.15% | 0.80% | 1.19% | |
| australian dollar | -0.30% | 0.58% | 0.49% | 1.61% | 0.15% | 0.99% | 1.38% | |
| new zealand dollar | -1.30% | -0.40% | -0.49% | 0.84% | -0.80% | -0.99% | 0.38% | |
| swiss franc | -1.69% | -0.79% | -0.88% | 0.25% | -1.19% | -1.38% | -0.38% |
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).
