Gold price steady amid geopolitical risks and hawkish Fed signals
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The gold market remains in a delicate balance as traders evaluate geopolitical risks and the Federal Reserve's cautious stance on rate cuts. The XAU/USD pair struggles to gain strong bullish momentum, trading just above $2,640 during the European session on Tuesday.
Gold Gains Support Amid Geopolitical Tensions
The price of gold benefits from safe-haven flows, driven by geopolitical turmoil. Prolonged tensions from the Russia-Ukraine war and escalating conflicts in the Middle East have heightened market anxiety. Additionally, US President-elect Donald Trump's proposed tariff policies, which could amplify inflationary pressures and disrupt global trade, contribute to a cautious investor sentiment favoring gold.
Recent developments include:
Ukraine's intensified military offensive in the Kursk region, with significant reported losses.
Continued bombardments in Gaza and Israeli military operations in Syria amid ceasefire disputes.
Fed’s Hawkish Outlook Limits Gold’s Upside
Despite haven-driven support, gold faces headwinds from the Federal Reserve’s hawkish stance. Fed officials have signaled a slower pace of rate cuts for 2025, emphasizing concerns over persistent inflation. Elevated US Treasury yields bolster the US Dollar, capping gains for non-yielding assets like gold.
Key highlights from Fed policymakers:
San Francisco Fed President Mary Daly emphasized inflation remains above target despite progress. Fed Governor Lisa Cook pointed to labor market resilience and sticky inflation as reasons for cautious monetary easing.
Market Focus on Key Economic Events
Traders are awaiting critical data later this week:
FOMC Meeting Minutes on Wednesday, offering insights into the Fed’s monetary policy outlook.
Nonfarm Payrolls (NFP) on Friday, a key indicator of US labor market health.
In the meantime, Tuesday's ISM Services PMI and JOLTS Job Openings could influence short-term trading sentiment.
Technical Outlook: Key Levels to Watch
Gold’s resilience above its 100-day Simple Moving Average (SMA), around $2,626, suggests near-term support for the bulls. However, strong resistance lies at $2,655-$2,657, followed by $2,665. Breaking above $2,700 could confirm an extended uptrend.
On the downside, breaking below $2,614 could trigger bearish momentum, potentially pushing the price towards $2,583 or lower.
Conclusion
Gold's performance this week hinges on geopolitical developments and upcoming US economic data. While haven flows offer near-term support, the Federal Reserve’s cautious policy stance and strong US Treasury yields could limit significant price appreciation. Traders should remain vigilant, monitoring key technical levels and macroeconomic indicators for directional cues.
Gold Gains Support Amid Geopolitical Tensions
The price of gold benefits from safe-haven flows, driven by geopolitical turmoil. Prolonged tensions from the Russia-Ukraine war and escalating conflicts in the Middle East have heightened market anxiety. Additionally, US President-elect Donald Trump's proposed tariff policies, which could amplify inflationary pressures and disrupt global trade, contribute to a cautious investor sentiment favoring gold.
Recent developments include:
Ukraine's intensified military offensive in the Kursk region, with significant reported losses.
Continued bombardments in Gaza and Israeli military operations in Syria amid ceasefire disputes.
Fed’s Hawkish Outlook Limits Gold’s Upside
Despite haven-driven support, gold faces headwinds from the Federal Reserve’s hawkish stance. Fed officials have signaled a slower pace of rate cuts for 2025, emphasizing concerns over persistent inflation. Elevated US Treasury yields bolster the US Dollar, capping gains for non-yielding assets like gold.
Key highlights from Fed policymakers:
San Francisco Fed President Mary Daly emphasized inflation remains above target despite progress. Fed Governor Lisa Cook pointed to labor market resilience and sticky inflation as reasons for cautious monetary easing.
Market Focus on Key Economic Events
Traders are awaiting critical data later this week:
FOMC Meeting Minutes on Wednesday, offering insights into the Fed’s monetary policy outlook.
Nonfarm Payrolls (NFP) on Friday, a key indicator of US labor market health.
In the meantime, Tuesday's ISM Services PMI and JOLTS Job Openings could influence short-term trading sentiment.
Technical Outlook: Key Levels to Watch
Gold’s resilience above its 100-day Simple Moving Average (SMA), around $2,626, suggests near-term support for the bulls. However, strong resistance lies at $2,655-$2,657, followed by $2,665. Breaking above $2,700 could confirm an extended uptrend.
On the downside, breaking below $2,614 could trigger bearish momentum, potentially pushing the price towards $2,583 or lower.
Conclusion
Gold's performance this week hinges on geopolitical developments and upcoming US economic data. While haven flows offer near-term support, the Federal Reserve’s cautious policy stance and strong US Treasury yields could limit significant price appreciation. Traders should remain vigilant, monitoring key technical levels and macroeconomic indicators for directional cues.