Gold Price Forecast: XAU/USD bull-bear tug-of-war extends ahead of US data
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UPGRADE- Gold struggles around $4,200 early Friday, eyes a modestly flat close to the week.
- US Dollar turns south alongside Treasury bond yields amid Fed rate cut buzz.
- Gold remains confined within a tight range; buyers refuse to give up yet.
Gold is keeping its range around the $4,200 mark, as the bull-bear tug-of-war extends into a third trading day on Friday.
Gold struggles, with eyes on US PCE inflation data
Despite increased calls for a US Federal Reserve (Fed) interest rate cut next week, Gold buyers struggle for impetus, trading on a cautious footing.
The main catalyst hindering Gold’s upside could be the renewed strength in the US Treasury bond yields this week, as the Japanese bond market woes spilled over into the US Treasury markets, unsettling investors.
However, a strong Japanese bond auction on Thursday calmed markets, which sent global yields lower, pausing the advance in US Treasury bond yields. This, in turn, is helping limit the downside in Gold in Asian trading on Friday.
The turn lower in US Treasury bond yields is capping the latest US Dollar rebound, keeping Gold price afloat.
Data on Thursday showed that the Initial Claims for state unemployment benefits fell 27,000 to a seasonally adjusted 191,000 for the week ended November 29, the lowest level since September 2022.
However, data published by Challenger, Gray & Christmas showed that employers reported 71,321 job cuts in November, its highest level for that month since 2022. Mixed US economic data did little to alter markets’ expectations of a Fed rate cut this month.
Markets continue to price in a roughly 90% chance of such a move, according to the CME Group’s FedWatch Tool.
Next of note for Gold markets remains the US annual core Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred inflation measure, for September. The data is delayed due to the 43-day government shutdown, which has now ended. However, it is unlikely to have a significant impact on the bright metal.
Later in the day, the preliminary University of Michigan (UoM) Consumer Sentiment and Inflation Expectations data will be published. The latter could provide insights on the Fed’s interest rate path beyond the December monetary policy meeting, triggering some action in Gold.
Gold price technical analysis: Daily chart
In the daily chart, the Simple Moving Averages (SMA) are bullishly aligned, with the 21-day above the 50-, 100- and 200-day, and all slopes rising. Price holds above these gauges, keeping buyers in control, while the 21-day SMA at $4,137.94 offers nearby support. The Relative Strength Index (RSI) stands at 60 (positive), backing the upward bias.
Measured from the $4,381.17 high to the $3,885.84 low, the 61.8% retracement at $4,191.95 has been reclaimed, hinting that the prior bearish phase is losing strength. Attention turns to the 78.6% retracement at $4,275.16 as next resistance, with pullbacks expected to find demand near the 50-day SMA at $4,076.85. A push through $4,275.16 would open the path toward the topside of the measured range, while failure to extend gains could keep the advance contained within the moving average cluster.
(The technical analysis of this story was written with the help of an AI tool)
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
- Gold struggles around $4,200 early Friday, eyes a modestly flat close to the week.
- US Dollar turns south alongside Treasury bond yields amid Fed rate cut buzz.
- Gold remains confined within a tight range; buyers refuse to give up yet.
Gold is keeping its range around the $4,200 mark, as the bull-bear tug-of-war extends into a third trading day on Friday.
Gold struggles, with eyes on US PCE inflation data
Despite increased calls for a US Federal Reserve (Fed) interest rate cut next week, Gold buyers struggle for impetus, trading on a cautious footing.
The main catalyst hindering Gold’s upside could be the renewed strength in the US Treasury bond yields this week, as the Japanese bond market woes spilled over into the US Treasury markets, unsettling investors.
However, a strong Japanese bond auction on Thursday calmed markets, which sent global yields lower, pausing the advance in US Treasury bond yields. This, in turn, is helping limit the downside in Gold in Asian trading on Friday.
The turn lower in US Treasury bond yields is capping the latest US Dollar rebound, keeping Gold price afloat.
Data on Thursday showed that the Initial Claims for state unemployment benefits fell 27,000 to a seasonally adjusted 191,000 for the week ended November 29, the lowest level since September 2022.
However, data published by Challenger, Gray & Christmas showed that employers reported 71,321 job cuts in November, its highest level for that month since 2022. Mixed US economic data did little to alter markets’ expectations of a Fed rate cut this month.
Markets continue to price in a roughly 90% chance of such a move, according to the CME Group’s FedWatch Tool.
Next of note for Gold markets remains the US annual core Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred inflation measure, for September. The data is delayed due to the 43-day government shutdown, which has now ended. However, it is unlikely to have a significant impact on the bright metal.
Later in the day, the preliminary University of Michigan (UoM) Consumer Sentiment and Inflation Expectations data will be published. The latter could provide insights on the Fed’s interest rate path beyond the December monetary policy meeting, triggering some action in Gold.
Gold price technical analysis: Daily chart
In the daily chart, the Simple Moving Averages (SMA) are bullishly aligned, with the 21-day above the 50-, 100- and 200-day, and all slopes rising. Price holds above these gauges, keeping buyers in control, while the 21-day SMA at $4,137.94 offers nearby support. The Relative Strength Index (RSI) stands at 60 (positive), backing the upward bias.
Measured from the $4,381.17 high to the $3,885.84 low, the 61.8% retracement at $4,191.95 has been reclaimed, hinting that the prior bearish phase is losing strength. Attention turns to the 78.6% retracement at $4,275.16 as next resistance, with pullbacks expected to find demand near the 50-day SMA at $4,076.85. A push through $4,275.16 would open the path toward the topside of the measured range, while failure to extend gains could keep the advance contained within the moving average cluster.
(The technical analysis of this story was written with the help of an AI tool)
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
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