Gold price struggles near two-week low amid modest USD strength, reduced Fed rate cut bets
|- Gold price remains under some selling pressure for the second successive day on Monday.
- Reduced bets for a March Fed rate cut move and a modest USD uptick weigh on the metal.
- Geopolitical risks could help limit further losses ahead of this week’s key data/event risks.
Gold price (XAU/USD) drifts lower for the second straight day on Monday and retreats further from an all-time peak touched last week. The precious metal remains depressed below the $2,000 psychological mark through the first half of the European session and is pressured by some follow-through US Dollar (USD) buying. The stronger-than-expected US monthly jobs report released on Friday forced investors to trim their bets for an early policy easing by the Federal Reserve (Fed). This leads to a further recovery in the US Treasury bond yields, which is seen underpinning the buck and undermining demand for the USD-denominated commodity.
Market participants, however, are still pricing in a greater chance of the first Fed rate cut move in March 2024. This, along with geopolitical risks and China's economic woes, is holding back traders from placing aggressive bearish bets around the Gold price. Investors also prefer to wait on the sidelines ahead of the crucial two-day FOMC policy decision, scheduled to be announced on Wednesday. In the run-up to the key central bank event risk, traders will confront the release of the US consumer inflation figures on Tuesday, which will play a key role in influencing market expectations about the Fed's next policy move and provide some impetus.
This week's rather busy economic calendar also highlights the Swiss National Bank (SNB), the Bank of England (BoE) and the European Central Bank (ECB) meetings on Thursday. Apart from this, the release of the flash PMI prints from the Eurozone, the UK and the US on Friday should contribute to making this an eventful week for the Gold price. Meanwhile, the aforementioned mixed fundamental backdrop warrants caution before positioning for any further intraday depreciating move amid absent relevant economic data on Monday.
Daily Digest Market Movers: Gold price languishes near two-week low, seems vulnerable to slide further
- The benchmark 10-year US Treasury yield rebounded from a three-month low after the upbeat US jobs data and lifted the US Dollar, which undermined the Gold price on Friday.
- The US NFP report showed that the economy added 199K new jobs in November, surpassing estimates for a reading of 180K and 150K rise in the previous month.
- The US Bureau of Labor Statistics (BLS) reported that the Unemployment Rate dipped to 3.7% from 3.9% in October, despite a rise in the Labor Force Participation Rate.
- The data pointed to the underlying labour market strength and made traders bet that it could take the Federal Reserve until May 2024 to deliver the first interest rate cut.
- The US troops were targeted with rockets and drones at least five more times on Friday by Iran-backed militias in Iraq and Syria over its support to Israel amid a war in Gaza.
- The US embassy in Iraq's capital Baghdad was shelled on Friday after being attacked by 14 rockets earlier, increasing fears of a broadening conflict in the Middle East.
- Traders now look to this week's US consumer inflation figures and the Fed's interest rate projections for next year before placing aggressive directional bets.
- A rather busy week also features the Swiss National Bank (SNB), the Bank of England (BoE) and the European Central Bank (ECB) monetary policy meetings on Thursday.
Technical Analysis: Gold price could extend the slide further towards testing the 50-day SMA support
From a technical perspective, Friday's breakdown below the $2,012-2,010 area, representing the 61.8% Fibonacci retracement level of the November-December rally, could be seen as a fresh trigger for bearish traders. Moreover, oscillators on the daily chart have been losing positive traction, which, in turn, supports prospects for deeper losses. Hence, a subsequent slide towards testing the 50-day Simple Moving Average (SMA), currently pegged around the $1,965-1,963 zone, looks like a distinct possibility. This is followed by the very important 200-day SMA, near the $1,951-1,950 region, which if broken decisively will set the stage for an extension of the recent sharp pullback from an all-time high touched last Monday.
On the flip side, the $2,010-2,012 support breakpoint now seems to act as an immediate hurdle ahead of the $2,030 level and the $2,040 supply zone. Against the backdrop of the occurrence of a golden cross, with the 50-day rising above the 200-day SMA, some follow-through buying will shift the near-term bias in favor of bullish traders. The Gold price might then climb to the next relevant resistance near the $2,071-2,072 region before aiming to reclaim the $2,100 round figure.
US Dollar price today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.03% | 0.11% | 0.12% | 0.35% | 0.40% | 0.23% | 0.04% | |
| EUR | -0.02% | 0.09% | 0.11% | 0.35% | 0.39% | 0.21% | 0.01% | |
| GBP | -0.10% | -0.09% | 0.02% | 0.26% | 0.30% | 0.12% | -0.08% | |
| CAD | -0.12% | -0.11% | -0.03% | 0.23% | 0.29% | 0.10% | -0.10% | |
| AUD | -0.36% | -0.35% | -0.27% | -0.24% | 0.05% | -0.13% | -0.34% | |
| JPY | -0.41% | -0.38% | -0.39% | -0.29% | -0.06% | -0.18% | -0.37% | |
| NZD | -0.23% | -0.20% | -0.11% | -0.10% | 0.13% | 0.17% | -0.19% | |
| CHF | -0.02% | -0.01% | 0.07% | 0.10% | 0.34% | 0.39% | 0.20% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
Economic Indicator
United States FOMC Press Conference
The press conference is about an hour long and has two parts. First, the Chair of the Federal Reserve (Fed) reads out a prepared statement, then the conference is open to questions from the press. The questions often lead to unscripted answers that create heavy market volatility. The Fed holds a press conference after all its eight yearly policy meetings.
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