Gold price stabilizes amid Fed speculations and geopolitical tensions
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Gold price trades higher near $2,650 amid suppressed US bond yields and geopolitical risks
Markets are betting on a Federal Reserve rate cut in December, but expectations for a less dovish Fed are limiting gold's gains
Resistance looms near $2,655–2,666, while immediate support rests at $2,630.
Market Context: Drivers of Gold Price
US Treasury Yields and Rate Cut Expectations
The US Treasury bond yields have dropped to their lowest level since October, increasing demand for the non-yielding gold. The Nonfarm Payrolls (NFP) report showed a solid increase of 227K jobs in November, reinforcing expectations of a 25 bps Fed rate cut in December. Despite the NFP's strength, the unemployment rate edged up to 4.2%, leaving room for Fed dovishness.
Inflation and Fed Commentary
University of Michigan’s consumer sentiment data improved, but one-year inflation expectations rose to 2.9%, signaling persistent inflationary pressures. Fed officials, including Cleveland's Beth Hammack and San Francisco's Mary Daly, have hinted at a cautious but flexible approach toward monetary easing.
Geopolitical and Economic Risks
Political instability in South Korea, geopolitical tensions, and trade war fears continue to bolster safe-haven demand for gold. However, President-elect Donald Trump's expansionary policies, which could stoke inflation, are tempering any significant rally in gold.
Technical Analysis: Gold Price Outlook
Upside Potential
Immediate resistance lies near the $2,650–2,655 supply zone, with the next hurdle at $2,666. Sustained buying beyond $2,672 could propel the price towards the $2,700 psychological mark and further to the $2,722 supply zone.
Downside Risks
Key support is situated around $2,630, with further levels at $2,613–2,614. A break below $2,605–2,600 could trigger deeper declines to the 100-day SMA at $2,586, and eventually to the November low at $2,537–2,536.
Conclusion
Gold prices remain range-bound as markets weigh Fed rate cut bets against geopolitical risks and expectations for a less dovish stance. The upcoming US CPI data will likely provide clarity on the Fed's direction, setting the stage for gold's next significant move. Traders should monitor price behavior near the critical $2,650 resistance and $2,630 support for short-term cues.
Market Context: Drivers of Gold Price
US Treasury Yields and Rate Cut Expectations
The US Treasury bond yields have dropped to their lowest level since October, increasing demand for the non-yielding gold. The Nonfarm Payrolls (NFP) report showed a solid increase of 227K jobs in November, reinforcing expectations of a 25 bps Fed rate cut in December. Despite the NFP's strength, the unemployment rate edged up to 4.2%, leaving room for Fed dovishness.
Inflation and Fed Commentary
University of Michigan’s consumer sentiment data improved, but one-year inflation expectations rose to 2.9%, signaling persistent inflationary pressures. Fed officials, including Cleveland's Beth Hammack and San Francisco's Mary Daly, have hinted at a cautious but flexible approach toward monetary easing.
Geopolitical and Economic Risks
Political instability in South Korea, geopolitical tensions, and trade war fears continue to bolster safe-haven demand for gold. However, President-elect Donald Trump's expansionary policies, which could stoke inflation, are tempering any significant rally in gold.
Technical Analysis: Gold Price Outlook
Upside Potential
Immediate resistance lies near the $2,650–2,655 supply zone, with the next hurdle at $2,666. Sustained buying beyond $2,672 could propel the price towards the $2,700 psychological mark and further to the $2,722 supply zone.
Downside Risks
Key support is situated around $2,630, with further levels at $2,613–2,614. A break below $2,605–2,600 could trigger deeper declines to the 100-day SMA at $2,586, and eventually to the November low at $2,537–2,536.
Conclusion
Gold prices remain range-bound as markets weigh Fed rate cut bets against geopolitical risks and expectations for a less dovish stance. The upcoming US CPI data will likely provide clarity on the Fed's direction, setting the stage for gold's next significant move. Traders should monitor price behavior near the critical $2,650 resistance and $2,630 support for short-term cues.