Gold maintains a moderate bearish tone with US yields and the US Dollar picking up


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  • Gold price witnessed an intraday turnaround from an all-time peak touched this Monday.
  • An uptick in the US bond yields revives the USD demand and prompts some profit-taking.
  • Geopolitical tensions, looming recession risks and Fed rate cuts should limit further losses.

Gold price (XAU/USD) retreats around $90 from a record peak, around the $2,144-$2,145 region and drops to a fresh daily low during the early part of the European session on Monday. The precious metal currently trades around the $2,068 area, down less than 0.10% for the day, and is pressured by a goodish pickup in the US Dollar (USD) demand, bolstered by a modest uptick in the US Treasury bond yields. This, along with overbought conditions on the daily chart, prompts bullish traders to take some profits off the table and exerts some pressure on the US Dollar-denominated commodity. The fundamental backdrop, however, still seems tilted firmly in favour of bullish traders and supports prospects for the emergence of some dip-buying at lower levels. 

Despite Federal Reserve (Fed) Chair Jerome Powell's attempts on Friday to moderate rate-cut expectations, investors seem convinced that the US central bank is done with its policy tightening campaign. This should keep a lid on any meaningful upside for the US bond yields and hold back the USD bulls from placing aggressive bets. Meanwhile, a further escalation of geopolitical tension in the Middle East comes on the back of fears of another COVID-19-like respiratory illness outbreak in China. This, along with the worsening conditions in the world's second-largest economy and a darkening global outlook, could lend support to the safe-haven Gold price and help limit the downside. Traders might also prefer to wait on the sidelines ahead of key US macro data. 

This week's rather busy US economic docket highlights the release of ISM Services PMI and JOLTS Job Openings data on Tuesday, followed by the ADP report on private-sector employment on Wednesday. The focus, however, will remain glued to the closely-watched US monthly employment details, popularly known as the Nonfarm Payroll (NFP) report, due on Friday. Hence, it will be prudent to wait for strong follow-through selling before confirming that the Gold price has topped out in the near term and positioning for any further depreciating move. 

Daily Digest Market Movers: Gold prices pare some gains with the USD bouncing up on profit-taking

  • The global risk-on rally hit a roadblock after an attack on an American warship and commercial vessels in the Red Sea on Sunday by Iran-backed Houthi rebels in Yemen.
  • A US military official confirmed that a "self-defence strike on an imminent threat" killed five Iraqi militants near the northern city of Kirkuk on Sunday afternoon.
  • A modest US Dollar uptick overshadows the risk of a further escalation of geopolitical tensions in the Middle East and prompts some profit-taking around the Gold price.
  • That said, growing acceptance that the Federal Reserve (Fed) will maintain the status quo in December and start cutting rates as early as March 2024 should lend support.
  • Fed Jerome Powell on Friday said that it would be premature to conclude when policy might ease, pushing back against speculations of more aggressive rate cuts.
  • Investors, however, seem convinced about an imminent shift in the Fed's policy stance, which should cap any recovery in the US bond yields and the Greenback. 
  • This week's US economic docket highlights the release of the ISM Services PMI on Tuesday, followed by the ADP report on private-sector employment on Wednesday and the US crucial NFP report on Friday.
  • A recent survey by the World Gold Council showed that 24% of all central banks intend to increase their Gold reserves in the next 12 months, as they increasingly grow pessimistic about the US as a reserve asset.

Technical Analysis: Gold price manages to find some support near 38.2% Fibo. level, bullish potential seems intact

From a technical perspective, the intraday pullback drags the precious metal below the 23.6% Fibonacci retracement level of the rally from the November monthly swing low, around the $1,932-$1,931 region. The Relative Strength Index (RSI) on the daily chart is flashing extremely overbought conditions and holding back bulls from placing fresh bets around the Gold price.

Some follow-through selling, meanwhile, could drag the XAU/USD to the 38.2% Fibo. level, around the $2063-2,062 zone, though is likely to find decent support near the $1,952-1,950 area. On the flip side, move back above the $2,095-2,100 immediate hurdle might now confront some resistance near the $2,118 area. Some follow-through buying should allow the Gold price to retest the record high around the $2,144-$2,145 region, which if cleared will reinforce the near-term positive outlook and pave the way for additional gains.

US Dollar price today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the Euro.

  USD EUR GBP CAD AUD JPY NZD CHF
USD   0.15% 0.35% 0.39% 0.54% 0.21% 0.49% 0.57%
EUR -0.18%   0.19% 0.23% 0.38% 0.03% 0.35% 0.41%
GBP -0.37% -0.20%   0.05% 0.19% -0.13% 0.17% 0.23%
CAD -0.41% -0.26% -0.06%   0.13% -0.21% 0.12% 0.16%
AUD -0.57% -0.43% -0.22% -0.18%   -0.33% -0.06% 0.00%
JPY -0.25% -0.04% 0.30% 0.23% 0.36%   0.33% 0.35%
NZD -0.50% -0.35% -0.17% -0.10% 0.05% -0.30%   0.06%
CHF -0.59% -0.44% -0.22% -0.17% -0.02% -0.35% -0.05%  

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).

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