Gold Price Update: Week Ending November 19
- Gold price dips below $2,570 head for an over 4% weekly decline.
- Jerome Powell indicates the Fed is cautious about cutting rates despite positive US economic indicators.
- Investors adjust expectations for a December rate cut, with likelihood dropping to 62% after Powell’s comments.
- US Retail Sales show growth while Industrial Production improved, despite remaining subdued.
Gold prices have been on a downward trend for the sixth consecutive day, with weekly losses exceeding 4%, marking the largest decline since September 2023. The recent comments from Federal Reserve Chair Jerome Powell, hinting at a cautious approach towards rate cuts due to a strong economy, solid labor market, and inflation above the 2% target, have boosted the US Dollar and dampened demand for gold. As of the latest update, XAU/USD is trading at $2,564, reflecting a 0.17% decrease.
The Impact of Jerome Powell’s Comments
On Thursday, Powell’s remarks regarding the Fed’s stance on interest rates have led investors to reevaluate their expectations for a potential rate cut in December. The probability of a 25 basis point reduction has decreased from 72% to 62%, following Powell’s indication that there is no urgency to lower borrowing costs.
US Economic Indicators
Despite the positive US economic data, including growth in Retail Sales for October and an improvement in Industrial Production, market participants have been cautious, leading to profit-taking activities. Retail Sales expanded both monthly and annually, while Industrial Production, although showing signs of improvement, remained in contractionary territory.
The US Dollar Index (DXY), which measures the performance of the Greenback against a basket of currencies, experienced a slight decline of 0.10%, reaching 106.76. Additionally, US Treasury bond yields remained stable, with the 10-year benchmark rate holding at 4.43%.
Market Concerns and Future Outlook
Market participants are also monitoring developments related to President Donald Trump’s tariff policies, which have the potential to impact inflation levels at a time when the Fed is striving to manage price increases without triggering a significant economic slowdown. Looking ahead, traders in the gold market will pay attention to upcoming economic indicators, including Fed speeches, housing data, Initial Jobless Claims, and the release of S&P Global Flash PMIs.
Daily Digest: Market Analysis
- Gold prices stabilize as US real yields decline, supporting Bullion.
- US Retail Sales for October surpass expectations, while Industrial Production shows signs of improvement.
- Investors are pricing in potential Federal Reserve rate cuts by the end of 2024.
XAU/USD Technical Analysis
Gold’s recent price movements have seen a decline below key levels, reaching a two-month low of $2,536. Although sellers have pushed prices lower, the lack of significant downward momentum towards $2,500 suggests a possible rebound. Resistance levels to watch include $2,600, $2,651 (50-day SMA), and $2,700, with further upside potential towards $2,710.
The Relative Strength Index (RSI) indicates bearish momentum in XAU/USD, suggesting possible further declines.
Gold FAQs
Gold has historically served as a store of value and medium of exchange, with its status as a safe-haven asset during turbulent times. It is also considered a hedge against inflation and depreciating currencies due to its independence from specific issuers or governments.
Central banks hold significant amounts of Gold to support their currencies during economic uncertainties, contributing to trust in a country’s solvency. Emerging economies like China, India, and Turkey are increasing their Gold reserves to bolster their economic stability.
Gold’s price is influenced by various factors, including its inverse correlation with the US Dollar and US Treasuries. Geopolitical instability, recession fears, and interest rate movements also impact gold prices, making it a key asset for diversification and risk management.