- Gold price witnessed good two-way price moves amid some repositioning of the US CPI report.
- Bets for a less dovish Fed, rising US bond yields underpin the USD and cap the precious metal.
- Geopolitical risks, trade war fears and rate-cut bets offer support to the safe-haven XAU/USD.
Gold price (XAU/USD) attracts some dip-buying near the $2,675-2,674 area and stalls its sharp intraday pullback from over a two-week high touched earlier this Wednesday. The commodity currently trades just below the $2,700 mark, nearly unchanged for the day, as traders opt to wait on the sidelines ahead of the US Consumer Price Index (CPI) report, due for release later during the North American session. The crucial inflation data will guide Federal Reserve (Fed) policymakers on their decision next week and provide some meaningful impetus to the non-yielding yellow metal.
In the meantime, a combination of diverging forces leads to a good two-way price move around the Gold price amid some repositioning trade ahead of the key data risk. Expectations that the Fed will adopt a cautious stance on cutting rates trigger a fresh leg up in the US Treasury bond yields. This assists the US Dollar (UD) in preserving its gains registered over the past three days and acts as a headwind for the commodity. That said, geopolitical risks, along with trade war fears, continue to offer some support to the safe-haven XAU/USD and warrant caution for bearish traders.
Gold price is influenced by a combination of diverging forces; bullish potential seems intact
- Israel launched airstrikes at military targets across Syria and deployed ground troops beyond a demilitarized buffer zone for the first time in 50 years following the collapse of President Bashar al-Assad’s regime over the weekend.
- Ukraine’s President Volodymyr Zelenskyy issued orders to increase funding for equipping brigades with new drones and raised the idea of foreign troops being deployed in Ukraine until it could join the NATO military alliance.
- US President-elect Donald Trump has pledged to impose big tariffs against America’s three largest trading partners – Mexico, Canada and China – and also threatened a 100% tariff on the so-called ‘BRICS’ nations.
- The Bank of Canada is expected to cut rates later today, while the European Central Bank and the Swiss National Bank are likely to follow suit on Thursday, which should continue to support the non-yielding Gold price.
- According to the CME Group’s FedWatch Tool, the markets are currently pricing in over an 85% probability that the Federal Reserve will lower borrowing costs by 25 basis points at its December policy meeting.
- However, the recent hawkish remarks from several influential FOMC members, including Fed Chair Jerome Powell, suggested that the US central bank might adopt a more cautious stance on cutting interest rates.
- Expectations for a less dovish Fed assisted the US Treasury bond yields to finish higher for the second day on Tuesday and lifted the US Dollar to a four-day high, albeit did little to dent the bullish sentiment around the precious metal.
- The market focus remains glued to the crucial US Consumer Price Index (CPI) report, which might offer cues about the interest rate outlook in the US and provide a fresh impetus to the non-yielding XAU/USD.
- The headline US CPI is expected to increase by 0.3% in November and rise by 2.7% on a yearly basis. Meanwhile, the core gauge (excluding food and energy prices) is forecast to remain unchanged at the 3.3% YoY rate.
Gold price seems poised to surpass the $2,700 mark and test the $2,720-2,722 supply zone
From a technical perspective, this week’s breakout through the $2,650-2,655 supply zone and the subsequent move up favors bullish traders. Moreover, oscillators on the daily chart have been gaining positive traction and are still far from being in the overbought territory. This, in turn, validates the near-term positive outlook for the Gold price and supports prospects for the emergence of some dip-buying near the aforementioned resistance breakpoint. This should help limit the downside for the XAU/USD near the $2,630 area, below which the downward trajectory could extend further towards the $2,600 round figure.
On the flip side, a sustained move beyond the $2,700 round figure could extend further towards the $2,720-2,722 hurdle. This is followed by resistance near the $2,735 region, which if cleared will suggest that the recent corrective decline from the all-time high touched in October has run its course and shift the bias in favor of bullish traders. The momentum might then lift the Gold price to the $2,758-2,760 barrier en route to the $2,770-2,772 region and the $2,790 area, or the record peak.
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 Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.00% | 0.02% | -0.12% | -0.06% | 0.11% | 0.10% | 0.05% | |
| EUR | 0.00% | 0.02% | -0.11% | -0.06% | 0.10% | 0.10% | 0.06% | |
| GBP | -0.02% | -0.02% | -0.16% | -0.08% | 0.08% | 0.07% | 0.03% | |
| JPY | 0.12% | 0.11% | 0.16% | 0.08% | 0.24% | 0.22% | 0.18% | |
| CAD | 0.06% | 0.06% | 0.08% | -0.08% | 0.16% | 0.16% | 0.11% | |
| AUD | -0.11% | -0.10% | -0.08% | -0.24% | -0.16% | -0.01% | -0.05% | |
| NZD | -0.10% | -0.10% | -0.07% | -0.22% | -0.16% | 0.00% | -0.05% | |
| CHF | -0.05% | -0.06% | -0.03% | -0.18% | -0.11% | 0.05% | 0.05% |
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 US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
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