Gold price stagnates as traders await Fed chair Powell's guidance
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Gold prices exhibit a cautious upward bias, supported by safe-haven demand stemming from geopolitical tensions and trade war fears. However, expectations for a less dovish Federal Reserve and stronger US bond yields cap gains. Traders await Jerome Powell's speech for directional cues as the yellow metal remains confined within a tight range.
Gold Prices Supported by Haven Demand, But Gains Limited
Gold (XAU/USD) traded positively for the second consecutive day, hovering around $2,650 early Wednesday, as geopolitical risks and economic concerns spurred demand for safe-haven assets. Persistent fears surrounding US President-elect Donald Trump's tariff plans and heightened geopolitical tensions, including fresh hostilities between Israel and Hezbollah, further underpinned the precious metal.
However, the upside remains constrained as traders anticipate insights from Federal Reserve Chair Jerome Powell's speech later today. Expectations that the Fed may adopt a cautious approach to rate cuts due to lingering inflation risks have supported US Treasury yields, which in turn limit gold’s appeal.
Mixed Economic Signals Complicate Gold’s Path
Recent data releases, such as the JOLTS report showing an increase in US job openings to 7.74 million in October, highlight a resilient labor market. This robust employment landscape, combined with stalled progress on inflation reduction, suggests the Federal Reserve may slow its rate-cutting trajectory in 2024. According to the CME FedWatch Tool, markets still see a 70% chance of a 25-basis-point rate cut at December's policy meeting.
Fed policymakers remain divided. While San Francisco Fed President Mary Daly emphasized the balanced labor market's stability, Governor Adrianna Kugler cautioned that progress on inflation remains incomplete. Chicago Fed President Austan Goolsbee also reiterated the need for rates to stay restrictive.
Global uncertainties weigh on gold, with China's Caixin Services PMI slipping to 51.5, signaling fragile recovery prospects in the world’s second-largest economy. These factors combine to keep gold in a holding pattern, with investors awaiting more clarity from upcoming US economic data and Fed policy guidance.
Technical Outlook: Key Levels to Watch
Gold’s recent price action indicates a bearish consolidation phase following last week's decline. A breakdown below the $2,621-$2,622 area could open the door to a retest of the psychological $2,600 support. Below this, the 100-day Simple Moving Average (SMA) at $2,579-$2,578 becomes the next key target, with further downside potentially extending to the November trough near $2,537-$2,536.
On the upside, immediate resistance lies at $2,655, with stronger barriers at $2,666 and $2,677-$2,678. A sustained move above the $2,700 mark would signal a shift in sentiment, with the $2,721-$2,722 region serving as a pivotal level for bullish momentum.
Looking Ahead: Powell’s Speech and Key Data
The market’s focus remains on Powell's address at the New York Times DealBook Summit and upcoming US economic data, including ADP employment and ISM Services PMI. These events will likely shape near-term expectations for Fed policy and, consequently, the trajectory for gold prices.
Gold’s performance remains tied to the interplay between safe-haven demand, central bank policy expectations, and macroeconomic data, keeping traders on edge as the week progresses.
Gold Prices Supported by Haven Demand, But Gains Limited
Gold (XAU/USD) traded positively for the second consecutive day, hovering around $2,650 early Wednesday, as geopolitical risks and economic concerns spurred demand for safe-haven assets. Persistent fears surrounding US President-elect Donald Trump's tariff plans and heightened geopolitical tensions, including fresh hostilities between Israel and Hezbollah, further underpinned the precious metal.
However, the upside remains constrained as traders anticipate insights from Federal Reserve Chair Jerome Powell's speech later today. Expectations that the Fed may adopt a cautious approach to rate cuts due to lingering inflation risks have supported US Treasury yields, which in turn limit gold’s appeal.
Mixed Economic Signals Complicate Gold’s Path
Recent data releases, such as the JOLTS report showing an increase in US job openings to 7.74 million in October, highlight a resilient labor market. This robust employment landscape, combined with stalled progress on inflation reduction, suggests the Federal Reserve may slow its rate-cutting trajectory in 2024. According to the CME FedWatch Tool, markets still see a 70% chance of a 25-basis-point rate cut at December's policy meeting.
Fed policymakers remain divided. While San Francisco Fed President Mary Daly emphasized the balanced labor market's stability, Governor Adrianna Kugler cautioned that progress on inflation remains incomplete. Chicago Fed President Austan Goolsbee also reiterated the need for rates to stay restrictive.
Global uncertainties weigh on gold, with China's Caixin Services PMI slipping to 51.5, signaling fragile recovery prospects in the world’s second-largest economy. These factors combine to keep gold in a holding pattern, with investors awaiting more clarity from upcoming US economic data and Fed policy guidance.
Technical Outlook: Key Levels to Watch
Gold’s recent price action indicates a bearish consolidation phase following last week's decline. A breakdown below the $2,621-$2,622 area could open the door to a retest of the psychological $2,600 support. Below this, the 100-day Simple Moving Average (SMA) at $2,579-$2,578 becomes the next key target, with further downside potentially extending to the November trough near $2,537-$2,536.
On the upside, immediate resistance lies at $2,655, with stronger barriers at $2,666 and $2,677-$2,678. A sustained move above the $2,700 mark would signal a shift in sentiment, with the $2,721-$2,722 region serving as a pivotal level for bullish momentum.
Looking Ahead: Powell’s Speech and Key Data
The market’s focus remains on Powell's address at the New York Times DealBook Summit and upcoming US economic data, including ADP employment and ISM Services PMI. These events will likely shape near-term expectations for Fed policy and, consequently, the trajectory for gold prices.
Gold’s performance remains tied to the interplay between safe-haven demand, central bank policy expectations, and macroeconomic data, keeping traders on edge as the week progresses.