Gold steadies below one-month high on Fed rate cut bets, softer USD
Press Hub UCapital
Share:
Gold trades near $2,720, below its recent one-month high, supported by safe-haven flows.
Geopolitical risks and December Fed rate cut expectations drive demand for the yellow metal.
Rising US bond yields and modest USD strength cap upside potential for non-yielding gold.
Market Overview
Gold prices have stabilized near $2,720 during early European trading after briefly touching a one-month high earlier in the session. Safe-haven demand remains robust due to escalating geopolitical tensions in Ukraine and the Middle East, along with concerns over US President-elect Donald Trump’s proposed tariffs.
Wednesday’s US Consumer Price Index (CPI) report reaffirmed market expectations of another 25-basis-point interest rate cut by the Federal Reserve next week, bolstering gold’s appeal. The CPI revealed a 0.3% monthly rise in November and a 2.7% annual increase, both slightly higher than October’s figures. The core CPI, excluding food and energy, also climbed by 0.3% month-on-month, holding steady at a 3.3% annual increase.
Drivers of Gold’s Movement
Supportive Factors: Geopolitical Risks: Escalating conflicts in Ukraine and the Middle East sustain demand for safe-haven assets. Fed Rate Cut Bets: CME’s FedWatch Tool indicates a 98% likelihood of a 25-basis-point cut at the December 18 meeting. Modest USD Weakness: While the dollar retains gains, modest softness supports gold’s upward momentum.
Limiting Factors: US Bond Yields: Expectations of a pause in Fed rate cuts due to Trump’s inflationary policies drive Treasury yields higher, pressuring gold. Profit-Taking: Following recent highs, investors may lock in gains, limiting immediate upside.
Technical Outlook
Gold’s technical setup suggests room for further upside, though immediate hurdles remain: Key Resistance Levels: The $2,726 area acts as an immediate hurdle, followed by stronger resistance at $2,748-$2,750. A sustained break above this zone could pave the way for a retest of the all-time high near $2,800, with intermediate resistance around $2,775. Key Support Levels: Initial support lies at $2,700, with stronger buying interest expected near $2,675-$2,674. Below this, the $2,658-$2,656 confluence zone, marked by the 50- and 200-period SMAs on the 4-hour chart, could provide further support.
Market Focus
Looking ahead, traders will monitor Thursday’s US Producer Price Index (PPI) and weekly Initial Jobless Claims data for near-term catalysts. However, the upcoming Federal Open Market Committee (FOMC) policy meeting next week remains the key event shaping gold’s trajectory.
Conclusion
While geopolitical tensions and Fed rate cut expectations provide solid support for gold, rising bond yields and a relatively strong USD could limit gains. Traders should remain cautious, as the $2,748-$2,750 zone will be critical for confirming a sustained bullish trend.
Market Overview
Gold prices have stabilized near $2,720 during early European trading after briefly touching a one-month high earlier in the session. Safe-haven demand remains robust due to escalating geopolitical tensions in Ukraine and the Middle East, along with concerns over US President-elect Donald Trump’s proposed tariffs.
Wednesday’s US Consumer Price Index (CPI) report reaffirmed market expectations of another 25-basis-point interest rate cut by the Federal Reserve next week, bolstering gold’s appeal. The CPI revealed a 0.3% monthly rise in November and a 2.7% annual increase, both slightly higher than October’s figures. The core CPI, excluding food and energy, also climbed by 0.3% month-on-month, holding steady at a 3.3% annual increase.
Drivers of Gold’s Movement
Supportive Factors: Geopolitical Risks: Escalating conflicts in Ukraine and the Middle East sustain demand for safe-haven assets. Fed Rate Cut Bets: CME’s FedWatch Tool indicates a 98% likelihood of a 25-basis-point cut at the December 18 meeting. Modest USD Weakness: While the dollar retains gains, modest softness supports gold’s upward momentum.
Limiting Factors: US Bond Yields: Expectations of a pause in Fed rate cuts due to Trump’s inflationary policies drive Treasury yields higher, pressuring gold. Profit-Taking: Following recent highs, investors may lock in gains, limiting immediate upside.
Technical Outlook
Gold’s technical setup suggests room for further upside, though immediate hurdles remain: Key Resistance Levels: The $2,726 area acts as an immediate hurdle, followed by stronger resistance at $2,748-$2,750. A sustained break above this zone could pave the way for a retest of the all-time high near $2,800, with intermediate resistance around $2,775. Key Support Levels: Initial support lies at $2,700, with stronger buying interest expected near $2,675-$2,674. Below this, the $2,658-$2,656 confluence zone, marked by the 50- and 200-period SMAs on the 4-hour chart, could provide further support.
Market Focus
Looking ahead, traders will monitor Thursday’s US Producer Price Index (PPI) and weekly Initial Jobless Claims data for near-term catalysts. However, the upcoming Federal Open Market Committee (FOMC) policy meeting next week remains the key event shaping gold’s trajectory.
Conclusion
While geopolitical tensions and Fed rate cut expectations provide solid support for gold, rising bond yields and a relatively strong USD could limit gains. Traders should remain cautious, as the $2,748-$2,750 zone will be critical for confirming a sustained bullish trend.