Gold remains close to its highest level since October 21 amid Fed's dovish outlook
- Gold edges lower on Friday as the prevalent risk-on environment undermines safe-haven assets.
- The Fed’s dovish outlook keeps the USD depressed and offers some support to the commodity.
- The fundamental backdrop favors the XAU/USD bulls and backs the case for a further move up.
Gold (XAU/USD) remains on the back foot through the Asian session on Friday, though it lacks follow-through and trades near its highest level since October 21, touched the previous day. A generally positive tone around the equity markets undermines demand for traditional safe-haven assets and acts as a headwind for the commodity. However, dovish US Federal Reserve (Fed) expectations, which had been a key factor behind the recent US Dollar (USD) slump to a two-month low, continue to lend support to the non-yielding yellow metal.
Apart from this, persistent geopolitical uncertainties, amid stalled talks on the Russia-Ukraine peace deal, limit the downside for the Gold price and favor bullish traders. Moreover, the overnight breakout through a nearly two-week-old trading range suggests that any corrective slide could be seen as a buying opportunity. Hence, it will be prudent to wait for strong follow-through selling before placing bearish bets around the XAU/USD pair. Traders now look forward to speeches from influential FOMC members for a fresh impetus.
Daily Digest Market Movers: Gold bulls have the upper hand amid rising Fed rate cut bets
- The US Federal Reserve's dovish outlook dragged the US Dollar to an over two-month low and lifted the non-yielding Gold to its highest level since October 21 on Thursday. In a widely expected move, the US central bank lowered borrowing costs by 25 basis points on Wednesday and projected just one more rate cut in 2026.
- Fed Chair Jerome Powell said during the post-meeting press conference that the US labor market has significant downside risks and that the central bank does not want its policy to push down on job creation. This fueled speculations about two more rate cuts by the Fed next year and, in turn, favors the XAU/USD bulls.
- Meanwhile, Asian stocks tracked the overnight strength on Wall Street and advanced in early trade on Friday, which is seen undermining demand for the traditional safe-haven bullion. However, prospects for lower interest rates in the US, along with persistent geopolitical uncertainties, could lend support to the commodity.
- Meanwhile, US President Donald Trump is extremely frustrated with Russia and Ukraine, and he doesn't want any more talk, his spokeswoman said on Thursday. Earlier, Ukrainian President Volodymyr Zelensky said that the US was pushing it to cede land to Russia as part of an agreement to end a nearly four-year war.
- There isn't any relevant market-moving economic data due for release from the US on Friday, leaving the USD at the mercy of speeches from influential FOMC members. Apart from this, the broader risk sentiment could provide some impetus to the yellow metal, which remains on track to register strong weekly gains.
Gold seems poised to build on two-week-old range barrier near $4,245-4,250 area
The overnight strong move up confirmed a fresh bullish breakout through a nearly two-week-old trading range hurdle, around the $4,245-4,250 region. Moreover, oscillators on the daily chart are holding in positive territory and are still away from being in the overbought zone, suggesting that the path of least resistance for the Gold price remains to the upside. Hence, any further pullback towards the aforementioned resistance breakpoint could be seen as a buying opportunity. This should limit losses for the XAU/USD pair near the $4,220-4,218 region, which is followed by the $4,200 mark and the $4,170-4,165 support area. A convincing break below the latter might shift the bias in favor of bearish traders and pave the way for deeper losses.
On the flip side, the $4,300 mark now seems to act as an immediate hurdle, above which the XAU/USD pair could climb to the next relevant hurdle near the $4,328-4,330 region. The momentum could extend further and allow the Gold to aim towards challenging the all-time peak, around the $4,380 zone, touched in October. Some follow-through buying beyond the $4,400 round figure will be seen as a fresh trigger for bullish traders and set the stage for an extension of the commodity's recent well-established uptrend from the October monthly swing low.
US Dollar Price This Month
The table below shows the percentage change of US Dollar (USD) against listed major currencies this month. US Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -1.22% | -1.19% | -0.28% | -1.48% | -1.81% | -1.44% | -1.10% | |
| EUR | 1.22% | 0.02% | 0.95% | -0.27% | -0.60% | -0.23% | 0.11% | |
| GBP | 1.19% | -0.02% | 1.17% | -0.29% | -0.63% | -0.25% | 0.09% | |
| JPY | 0.28% | -0.95% | -1.17% | -1.20% | -1.55% | -1.16% | -0.83% | |
| CAD | 1.48% | 0.27% | 0.29% | 1.20% | -0.39% | 0.05% | 0.38% | |
| AUD | 1.81% | 0.60% | 0.63% | 1.55% | 0.39% | 0.38% | 0.73% | |
| NZD | 1.44% | 0.23% | 0.25% | 1.16% | -0.05% | -0.38% | 0.34% | |
| CHF | 1.10% | -0.11% | -0.09% | 0.83% | -0.38% | -0.73% | -0.34% |
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.
