- Gold price regains positive traction amid a modest pullback in the US bond yields.
- Hawkish Fed expectations favor the USD bulls and should cap the precious metal.
- The risk-on impulse might further contribute to keeping a lid on the XAU/USD pair.
Gold price (XAU/USD) struggles to capitalize on its modest intraday move up and trades around the $2,669-$2,670 area through the first half of the European session on Tuesday, still up over 0.25% for the day. The US Treasury bond yields retreat from over a one-year peak in reaction to reports that US President-elect Donald Trump's top economic advisers are mulling a slow ramp-up in tariffs to prevent a sudden spike in inflation. This, in turn, drags the US Dollar (USD) away from a two-year peak and lends some support to the precious metal.
That said, a combination of factors keeps a lid on the Gold price. Easing fears about disruptive trade tariffs under Trump 2.0 boosts investors' confidence. Furthermore, the upbeat US Nonfarm Payrolls (NFP) report released on Friday reinforced bets for a slower pace of interest rate cuts this year. This should act as a tailwind for the US bond yields and the USD, which is holding back traders from placing aggressive bullish bets around the non-yielding yellow metal. Investors now look to the US Producer Price Index (PPI) for a fresh impetus.
Gold price bulls seem non-committed amid risk-on mood, bets for slower Fed rate cuts
- Bloomberg, citing people familiar with the matter, reported on Monday that President-elect Donald Trump's economic advisers are considering a program to gradually increase tariffs month by month.
- The approach, aimed at boosting negotiating leverage and helping avoid a sudden spike in inflation, triggers a modest pullback in the US Treasury bond yields and revives demand for the Gold price.
- The sizzling US job report cemented expectations the Federal Reserve will proceed with caution while cutting rates this year, which helps the US Dollar to stall Monday's pullback from over a two-year high.
- The Fed's hawkish outlook should also limit the benchmark 10-year US Treasury bond yields' corrective slide from a 14-month high and keep a lid on any further gains for the non-yielding yellow metal.
- US President-elect Donald Trump has repeatedly promised to end the conflict in Ukraine and said that he will meet Russian President Vladimir Putin “very quickly” after he takes office next week.
- The US indicated that a ceasefire deal is on the brink of success while Hamas said talks are progressing well. Two Israeli officials said that Hamas will release 33 hostages in the first phase of the ceasefire agreement.
- Investors now look forward to key inflation prints – starting with the Producer Price Index later today, followed by the US consumer inflation figures on Wednesday – for some meaningful impetus.
Gold price struggles to capitalize on intraday move-up, remains below $2,700 pivotal hurdle
From a technical perspective, any subsequent strength beyond the $2,676-2,677 area is likely to confront some resistance near the $2,690 zone ahead of the $2,700 mark. Some follow-through buying beyond the latter will set the stage for an extension of over a three-week-old uptrend and lift the Gold price to the $2,716-2,717 hurdle en route to the December monthly swing high, around the $2,726 region.
On the flip side, the $2,657-2,656 area, Monday's low, might continue to protect the immediate downside. A convincing break below, however, could make the Gold price vulnerable to accelerate the downfall towards the $2,635 region. The downward trajectory could extend further towards the $2,610 confluence, comprising the 100-day Exponential Moving Average (SMA) and a multi-week-old ascending trend line.
Economic Indicator
Producer Price Index (YoY)
The Producer Price Index released by the Bureau of Labor statistics, Department of Labor measures the average changes in prices in primary markets of the US by producers of commodities in all states of processing. Changes in the PPI are widely followed as an indicator of commodity inflation. Generally speaking, a high reading is seen as positive (or bullish) for the USD, whereas a low reading is seen as negative (or bearish).
Read more.Next release: Tue Jan 14, 2025 13:30
Frequency: Monthly
Consensus: 3.4%
Previous: 3%
Source: US Bureau of Labor Statistics
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD turns negative near 1.0280
EUR/USD could not sustain a post-US CPI move beyond 1.0300 the figure and succumbed to the late rebound in the US Dollar, slipping back to the 1.0280 region in the wake of the closing bell in Europe.
GBP/USD fades the early uptick and approaches 1.2200
GBP/USD now suffers the bounce in the Greenback and gives away its earlier advance to the 1.2300 neighbourhood, refocusing on a potential new visit to 1.2200 and possibly below.
Gold extends gains, nears $2,700
Gold’s price recovered initial weekly losses and edges higher for the second day in a row, approaching the $2,700 mark of broad US Dollar's weakness. Risk appetite limits demand for the safe-haven metal.
Donald Trump’s World Liberty Financial crypto holdings loss over $4.8 million
Lookonchain data shows that Trump’s backed DeFi platform World Liberty Financial faces a $4.84 million loss in its crypto holdings. WLFI’s X account announced routine crypto movements for treasury management, fees, and working capital needs.
Eurozone industrial production ticked up in November
The slight 0.2% rise in production from October is insufficient to indicate a reversal of the two-year downward trend. Overall, the outlook for industry remains quite weak at the start of the year.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.