- Reviving safe-haven demand helped build on the recent positive move.
- Fed rate cut expectations/subdued USD price action remained supportive.
Gold edged higher on the last trading day of the week and climbed to fresh two-week tops, around the $1507 region in the last hour.
The precious metal gains some follow-through traction for the fourth straight session on Friday and added to this week's positive move, further beyond the key $1500 psychological mark amid reviving safe-haven demand.
Bulls trying to seize near-term control
Against the backdrop of growing concerns about slowing global economic growth, risk of an early snap election in the UK weighed on investors' sentiment and drove flows towards traditional safe-haven assets – including Gold.
The global flight to safety was further evident from a modest downtick in the US Treasury bond yields, which coupled with firming Fed rate cut expectations provided an additional boost to the non-yielding yellow metal.
Adding to this, a subdued US Dollar price action further underpinned demand for the dollar-denominated commodity, albeit the uptick seemed to lack any strong bullish conviction on the back of US-China trade optimism.
Reports suggested that China aims to buy at least $20 billion of American farm products as a part of the phase one deal in the first year. This would bring purchases back to 2017 levels, or before the US-China trade war began.
In the absence of any major market-moving economic releases from the US, the broader market risk sentiment and the USD price dynamics might produce some short-term trading opportunities on the last day of the week.
Technical levels to watch
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EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
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