Gold price surrenders major part of intraday gains; downside seems limited
- Gold price climbs back closer to a two-week high and draws support from a combination of factors.
- Geopolitical risks continue to benefit the safe-haven XAU/USD amid December Fed rate cut bets.
- The technical setup now seems tilted in favor of bulls and supports prospects for additional gains.
Gold price (XAU/USD) surrenders a major part of its intraday gains back closer to a two-week high touched the previous day and trades with a mild positive bias, just above the $2,660 level during the early European session on Tuesday. The US Dollar (USD) attracts some follow-through buyers and looks to build on the post-NFP bounce from a nearly one-month low amid bets that the Federal Reserve (Fed) will adopt a cautious stance on cutting interest rates. This, in turn, is seen as a key factor undermining the non-yielding yellow metal and capping gains.
That said, the worsening Russia-Ukraine war, political turmoil in South Korea and France, and the resumption of buying by China’s central bank for the first time in seven months should lend support to the safe-haven Gold price. Furthermore, growing acceptance that the Fed will lower borrowing costs later this month keep the US Treasury bond yields suppressed and might contribute to limiting the downside for the XAU/USD. This, along with concerns about US President-elect Donald Trump's tariff plans, supports prospects for some meaningful upside for the XAU/USD.
Gold price struggles to build on intraday move up amid modest USD strength
- Geopolitical tensions in the Middle East increased over the weekend after Syrian rebels took control, forcing President Bashar al-Assad to flee to Russia and driving haven flows towards the Gold price.
- The People’s Bank of China announced on Saturday said it bought 160,000 fine troy ounces of Gold in November, ending a six-month pause in purchases and lending additional support to the bullion.
- US President-elect Donald Trump has pledged to impose big tariffs against America’s three biggest trading partners – Mexico, Canada and China – and also threatened a 100% tariff on 'BRICS' nations.
- The CME Group's FedWatch Tool indicates that traders are currently pricing in over an 85% chance that the Federal Reserve will lower borrowing costs by 25 basis points at its December policy meeting.
- The recent hawkish remarks by several Fed officials, along with expectations that Trump's policies would reignite inflation, suggest that the US central bank could pause its rate-cutting cycle.
- This led to the overnight bounce in the US Treasury bond yields, from the lowest daily close since October 18 posted on Friday, and offers some support to the US Dollar, cap the upside for the XAU/USD.
- This week’s main event will be Wednesday’s release of the US Consumer Price Index for November, which might guide Fed policymakers on their decision and influence the non-yielding yellow metal.
Gold price could attract some dip-buyers near $2,650 resistance breakpoint
From a technical perspective, the overnight breakout through and daily close above the $2,650 barrier could be seen as a fresh trigger for bullish traders. Moreover, oscillators on the daily chart have just started gaining positive traction and support prospects for a further appreciating move for the Gold price. Hence, some follow-through strength towards reclaiming the $2,700 mark, en route to the $2,720-2,722 supply zone, looks like a distinct possibility.
On the flip side, the $2,650 resistance breakpoint, which coincides with the 200-period Exponential Moving Average (EMA) on the 4-hour chart, should now act as an immediate strong support. A convincing break below might expose the next relevant support near the $2,625-2,620 area before the Gold price eventually drops to the $2,600 mark. A subsequent break below the 100-day SMA, currently around the $2,590-2,585 region, will set the stage for deeper losses and drag the XAU/USD to the November swing low, around the $2,537-2,536 zone.
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 Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.13% | -0.09% | 0.03% | -0.02% | 0.59% | 0.53% | -0.18% | |
| EUR | 0.13% | 0.07% | 0.14% | 0.10% | 0.73% | 0.66% | -0.05% | |
| GBP | 0.09% | -0.07% | 0.08% | 0.05% | 0.68% | 0.61% | -0.10% | |
| JPY | -0.03% | -0.14% | -0.08% | -0.02% | 0.58% | 0.50% | -0.19% | |
| CAD | 0.02% | -0.10% | -0.05% | 0.02% | 0.61% | 0.55% | -0.15% | |
| AUD | -0.59% | -0.73% | -0.68% | -0.58% | -0.61% | -0.07% | -0.76% | |
| NZD | -0.53% | -0.66% | -0.61% | -0.50% | -0.55% | 0.07% | -0.70% | |
| CHF | 0.18% | 0.05% | 0.10% | 0.19% | 0.15% | 0.76% | 0.70% |
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 US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
