Gold Price Soars for Second Consecutive Day, Fueled by Multiple Factors
- Geopolitical tensions, declining US bond yields, and weakened USD drive XAU/USD higher
- Expectations of less aggressive Fed rate cuts could limit commodity gains
The price of gold (XAU/USD) continues its upward trend for the second day in a row, distancing itself from a recent two-month low. Surging to a one-week peak around $2,626-2,626 during the Asian trading session, gold’s climb is supported by a combination of factors. With US Treasury bond yields softening, the USD faces pressure below its year-to-date peak, prompting investors to seek refuge in the precious metal amidst geopolitical uncertainties.
Furthermore, the anticipated policies of US President-elect Donald Trump are expected to reignite inflationary pressures, potentially limiting the Fed’s room for further rate cuts. This scenario could maintain US bond yields at a stable level, favoring USD bulls and potentially capping the gold price’s ascent. To confirm that the recent sharp decline in XAU/USD from its all-time high has reached its bottom, it would be wise to wait for strong follow-through buying.
Factors Driving Gold Price Upwards
- Authorization for Ukraine to use US missiles against Russia boosts haven demand for gold
- Weakening US Dollar from recent highs supports XAU/USD
- Reduced expectations for aggressive Fed rate cuts may limit gold’s upside potential
- Anticipated Trump administration policies could stoke inflation, impacting Fed’s monetary policy
- Caution from influential FOMC members on rate cuts favors USD bulls
- Upcoming US economic data releases and Fed speeches will influence gold price movements
- Focus on manufacturing and service sector PMI data to gauge market reaction to trade tariffs
Technical Analysis and Potential Price Movements
The recent surge in gold price, supported by resilience below the 100-day SMA and breaching the 23.6% Fibonacci retracement level, signals potential intraday gains. However, daily chart oscillators, while recovering, are yet to confirm a bullish bias. Resistance is expected near the $2,634-2,635 level, with further hurdles at the 38.2% Fibo. level. A short-covering rally could drive prices towards the $2,655-2,657 zone.
On the downside, the $2,600 level acts as immediate support, followed by the $2,569-2,568 region. Breaking below could lead to a test of the 100-day SMA near $2,551-2,550, with further downside towards $2,500. Bearish momentum may accelerate below last week’s low around $2,536.
US Dollar’s Performance Against Major Currencies Today
The table below reflects the percentage change of the US Dollar (USD) against key currencies today:
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.02% | -0.02% | -0.12% | 0.02% | -0.10% | 0.04% | 0.03% |
Observing the performance of the US Dollar against major currencies offers insights into its current strength and direction in the forex market.