- Gold price trades with a positive bias for the third straight day, albeit lacks follow-through.
- Expectations for an imminent shift in the Fed’s policy stance continue to act as a tailwind.
- A further recovery in the US bond yields helps revive the USD demand and cap the upside.
- Traders also seem reluctant to place fresh directional bets ahead of the key US NFP report.
Gold price (XAU/USD) continues with its struggle to gain any meaningful traction and oscillates in a multi-day-old band during the Asian session on Friday. The precious metal, however, manages to hold in the positive territory for the third successive day and remains supported by expectations that interest rates in the United States (US) have peaked. That said, bulls opt to wait for the release of the closely-watched US Nonfarm Payrolls (NFP) for signs of a weaker labor market, which will boost chances of a rate cut by the Federal Reserve (Fed) as early as March 2024 and lift the non-yielding yellow metal.
In the run-up to the key data risk, a further recovery in the US Treasury bond yields helps revive the US Dollar (USD) demand. This, in turn, is seen holding back traders from placing aggressive bullish bets around the USD-denominated Gold price. Apart from this, the overnight strong rally in the US equity markets turns out to be another factor acting as a headwind for the safe-haven XAU/USD. Any meaningful corrective decline, meanwhile, still seems elusive in the wake of dovish Fed expectations, a darkening global economic outlook (particularly in China) and geopolitical tensions.
Daily Digest Market Movers: Gold price continues to draw support from rising bets for a Fed rate cut move in March 2024
- The market conviction that the Federal Reserve is done with its policy-tightening campaign and may start cutting rates in 2024 continues to act as a tailwind for the Gold price.
- The US JOLTS Job Openings data and the ADP report released earlier this week pointed to a cooling in the US labor market and reaffirmed dovish Fed expectations.
- According to the CME group’s FedWatch Tool, traders are currently pricing in over a 60% chance of a 25 bps Fed rate cut move as early as the March 2024 policy meeting.
- The yield on the benchmark 10-year US government bond moves away from a three-month low and lends some support to the US Dollar, capping gains for the non-yielding metal.
- The lack of any further escalation in the Middle East tensions and the overnight risk-on rally in the US equity markets also contributes to keeping a lid on the safe-haven XAU/USD.
- Traders now look to the closely-watched US monthly employment details for more cues about labor market conditions and the timing when the Fed could begin loosening policy.
- The headline NFP print is expected to show that the US economy added 180K jobs in November, up from 150K in the previous month, and the unemployment rate held steady at 3.9%.
- The focus will also be on Average Hourly Earnings data, which is expected to have risen by 0.3% during the reported month and by 4% over the past 12 months through November.
- Any negative surprise could force the Fed to soften its hawkish tone in the coming months and benefit the commodity amid worries about a global economic downturn and geopolitical tensions.
Technical Analysis: Gold price extends its consolidative price move in a familiar trading band held over the past four days
From a technical perspective, the recent range-bound price action witnessed over the past four days constitutes the formation of a rectangle on short-term charts. This points to a consolidation phase before the next leg of a directional move. Meanwhile, the lower boundary of the said trading band now coincides with the 100-period Simple Moving Average (SMA), currently pegged around the $2,015-2,014 area. This, in turn, should act as a key pivotal point ahead of the $2,000 psychological mark. A convincing break below the latter could drag the Gold price to the $1,977-1,976 horizontal support. The corrective decline could get extended further towards the very important 200-day SMA, near the $1,950 area.
On the flip side, the $2,038-2,040 region, representing the top end of the multi-day-old trading range, might continue to act as an immediate barrier. A sustained strength beyond will be seen as a fresh trigger for bullish traders amid the occurrence of a golden cross, with the 50-day Simple Moving Average rising above the 200-day SMA. Moreover, oscillators on the daily chart are holding comfortably in the positive territory and are still far from being in the overbought zone. This, in turn, suggests that the path of least resistance for the Gold price is to the upside. In the meantime, any subsequent move up might confront some resistance near the $2,045 level ahead of the $2,071-2,072 area and the $2,100 round figure.
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 Euro.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | -0.02% | -0.04% | -0.18% | -0.25% | -0.43% | -0.03% | -0.06% | |
| EUR | 0.02% | -0.02% | -0.16% | -0.24% | -0.42% | -0.02% | -0.03% | |
| GBP | 0.04% | 0.02% | -0.15% | -0.22% | -0.40% | -0.01% | 0.00% | |
| CAD | 0.18% | 0.16% | 0.15% | -0.07% | -0.25% | 0.15% | 0.13% | |
| AUD | 0.25% | 0.24% | 0.22% | 0.07% | -0.18% | 0.22% | 0.20% | |
| JPY | 0.38% | 0.42% | 0.40% | 0.24% | 0.18% | 0.37% | 0.38% | |
| NZD | 0.04% | 0.02% | 0.00% | -0.15% | -0.22% | -0.40% | -0.01% | |
| CHF | 0.06% | 0.03% | 0.01% | -0.14% | -0.21% | -0.38% | 0.00% |
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 Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
Gold FAQs
Why do people invest in Gold?
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Who buys the most Gold?
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
How is Gold correlated with other assets?
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
What does the price of Gold depend on?
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
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