- Gold price attracts some buyers for the fifth successive day amid modest USD weakness.
- Geopolitical risks benefit the safe-haven XAU/USD and remain supportive of the uptick.
- Elevated US bond yields cap any further gains ahead of the key FOMC meeting minutes.
Gold price (XAU/USD) fails to break through the 50-day Simple Moving Average (SMA) barrier and trims a part of its intraday gains to over a one-week high touched during the early European session on Wednesday. Traders now seem reluctant to place fresh bullish bets and opt to wait for the release of the highly-anticipated FOMC meeting minutes. Investors will scrutinize the minutes for fresh cues about the Federal Reserve's (Fed) rate-cut path, which will play a key role in influencing the US Dollar (USD) price dynamics and provide a fresh directional impetus to the non-yielding yellow metal.
In the meantime, the markets have fully priced out the possibility of early rate cuts by the Fed in the wake of a still resilient US economy, which remains supportive of elevated US Treasury bond yields. This, in turn, acts as a tailwind for the buck and caps the upside for the Gold price. That said, persistent worries about geopolitical tensions stemming from conflicts in the Middle East and the prolonged Russia-Ukraine war might continue to lend some support to the safe-haven precious metal. Hence, it will be prudent to wait for strong follow-through selling before positioning for a meaningful intraday slide.
Daily Digest Market Movers: Gold price eases from one-week high as elevated US bond yields underpin USD
- A combination of supporting factors assists the Gold price to steadily climb back closer to a one-week peak and the 50-day SMA barrier during the Asian session on Wednesday.
- The markets are pricing in four 25 basis points interest rate cuts by the Federal Reserve in 2024, starting from June, which weighs on the US Dollar and lends support to the metal.
- Investors remain concerned about the risk of a further escalation of tensions in the Middle East in the wake of a string of attacks on shipping in the Red Sea by Houthi rebels in Yemen.
- US officials said last week that Russia is developing a space-based anti-satellite nuclear weapon, though President Vladimir Putin said that Moscow is against the deployment of nuclear weapons in space.
- A White House official said that the US will announce a major sanctions package against Russia on Friday to hold President Vladimir Putin accountable for the two-year war on Ukraine.
- The People’s Bank of China lowered the five-year loan prime rate by 25 bps – the biggest cut since it was introduced in 2019 – to support real estate developers and bolster economic growth.
- The yield on the benchmark 10-year US government bond holds comfortably above the 4.0% mark as traders keenly await the FOMC meeting minutes for fresh cues about the rate-cut path.
- Hawkish signals from policymakers will likely renew jitters that the Fed will keep rates higher for longer, which, in turn, should boost the buck and may not be good news for the XAU/USD.
Technical Analysis: Gold price bulls face rejection near 50-day SMA pivotal resistance, downside seems limited
From a technical perspective, sustained strength and acceptance above the 50-day SMA will set the stage for an extension of the recent recovery from the $1,984 region, or a two-month low touched last week. Given that oscillators on the daily chart have been gaining positive traction, the Gold price might then accelerate the positive move towards an intermediate hurdle near the $2,044-2,045 region en route to the $2,065 supply zone.
On the flip side, the $2,016-2,015 area could protect the immediate downside ahead of the 100-day SMA, currently pegged near just below the $2,000 psychological mark. Some follow-through selling, leading to a subsequent break through the $1,984 area, or the monthly low, will be seen as a fresh trigger for bearish traders. The subsequent downfall has the potential to drag the Gold price to the very important 200-day SMA support near the $1,965 region.
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 | -0.06% | -0.07% | -0.11% | -0.26% | -0.05% | -0.35% | -0.15% | |
| EUR | 0.07% | -0.01% | -0.04% | -0.19% | 0.00% | -0.28% | -0.08% | |
| GBP | 0.08% | 0.01% | -0.02% | -0.19% | 0.04% | -0.27% | -0.06% | |
| CAD | 0.10% | 0.03% | 0.03% | -0.17% | 0.04% | -0.25% | -0.04% | |
| AUD | 0.27% | 0.19% | 0.18% | 0.16% | 0.21% | -0.09% | 0.12% | |
| JPY | 0.05% | -0.01% | -0.04% | -0.04% | -0.20% | -0.31% | -0.10% | |
| NZD | 0.35% | 0.28% | 0.28% | 0.24% | 0.08% | 0.30% | 0.21% | |
| CHF | 0.14% | 0.08% | 0.06% | 0.04% | -0.12% | 0.10% | -0.21% |
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 Minutes
FOMC stands for The Federal Open Market Committee that organizes 8 meetings in a year and reviews economic and financial conditions, determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth. FOMC Minutes are released by the Board of Governors of the Federal Reserve and are a clear guide to the future US interest rate policy.
Read more.Why it matters to traders
Minutes of the Federal Open Market Committee (FOMC) is usually published three weeks after the day of the policy decision. Investors look for clues regarding the policy outlook in this publication alongside the vote split. A bullish tone is likely to provide a boost to the greenback while a dovish stance is seen as USD-negative. It needs to be noted that the market reaction to FOMC Minutes could be delayed as news outlets don’t have access to the publication before the release, unlike the FOMC’s Policy Statement.
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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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