Gold retains negative bias amid receding safe-haven demand; $4,200 holds the key
- Gold attracts some sellers as a positive risk tone undermines traditional safe-haven assets.
- Rising December Fed rate cut bets keep the USD depressed and support the precious metal.
- Traders also seem reluctant and now look to this week’s US macro data for a fresh impetus.
Gold (XAU/USD) maintains its offered tone through the first half of the European session on Tuesday, though it lacks follow-through selling and, so far, has managed to hold above the $4,200 mark. A generally positive tone around the equity markets undermines demand for traditional safe-haven assets and drags the precious metal away from its highest level since October 20, touched on Monday. However, dovish US Federal Reserve (Fed) expectations act as a tailwind for the non-yielding yellow metal.
Investors now seem convinced that the US central bank will lower borrowing costs again at its upcoming policy meeting next week. This, in turn, fails to assist the US Dollar (USD) to capitalize on the overnight bounce from a two-week low and continues to offer some support to the Gold price. Hence, it will be prudent to wait for strong follow-through selling before placing aggressive bearish bets around the XAU/USD pair and positioning for further losses as focus shifts to this week's key US macro releases.
Daily Digest Market Movers: Gold remains depressed amid positive risk tone; dovish Fed expectations limit losses
- Asian equity markets begin the day on a positive note after the previous day's selloff, undermining demand for the traditional safe-haven Gold on Tuesday. The commodity, however, reverses an Asian session dip to sub-$4,200 levels amid dovish Federal Reserve expectations and the bearish sentiment surrounding the US Dollar.
- Traders ramped up their bets for further policy easing by the US central bank following the recent comments from several Fed officials. Adding to this, the recent tepid US economic data suggests that growth in the world's largest economy is cooling and reaffirms market expectations for another interest rate cut by the Fed in December.
- In fact, the Institute for Supply Management (ISM) reported on Monday that its Manufacturing PMI for November fell to 48.2 from 48.7 in the previous month. The reading missed estimates and pointed to a slowdown in the manufacturing sector, which could potentially impact the overall economy and keep the USD bulls on the defensive.
- On the geopolitical front, US envoy Steve Witkoff and Russian President Vladimir Putin are expected to hold talks in Moscow on Tuesday to discuss the Trump administration's proposal to end the war in Ukraine. This comes after Ukraine's negotiator Rustem Umerov said that significant progress had been achieved in the latest Florida talks.
- However, US Secretary of State Marco Rubio noted that more work remains to be done towards ending the war. Furthermore, Ukrainian President Volodymyr Zelensky was seeking support from European allies amid fears that the US plan reads like a wishlist for Moscow. This keeps geopolitical risks in play and supports the XAU/USD pair.
- Traders now look forward to this week's important US macro releases, including the ADP report on private-sector employment and the US Personal Consumption Expenditure (PCE) Price Index. The crucial data will influence expectations about the Fed's rate-cut path, which, in turn, will drive the USD and provide a fresh impetus to the commodity.
Gold needs to find acceptance below the $4,200 mark to back the case for further losses
The near-term bias seems tilted in favor of the XAU/USD bulls. Given that oscillators on 4-hour/daily charts are holding in positive territory, any further weakness below the $4,200 mark could be seen as a buying opportunity and find decent support near the $4,155-4,153 region. The latter should act as a key pivotal point, which, if broken, could drag the Gold price to the $4,100 mark en route to the $4,065 confluence – comprising the 200-period Exponential Moving Average (EMA) on the 4-hour chart and an ascending trend-line extending from late October.
On the flip side, momentum beyond the overnight swing high, around the $4,264-4,265 region, will reaffirm the constructive outlook and allow the Gold price to reclaim the $4,300 round figure. Some follow-through buying should pave the way for additional gains towards the $4,340-4,345 intermediate hurdle en route to the all-time peak, around the $4,380 region, touched in October.
US Dollar Price Last 7 Days
The table below shows the percentage change of US Dollar (USD) against listed major currencies last 7 days. US Dollar was the strongest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.80% | -0.84% | -0.58% | -0.82% | -1.42% | -2.06% | -0.51% | |
| EUR | 0.80% | -0.04% | 0.22% | -0.03% | -0.62% | -1.28% | 0.29% | |
| GBP | 0.84% | 0.04% | 0.27% | 0.00% | -0.58% | -1.24% | 0.33% | |
| JPY | 0.58% | -0.22% | -0.27% | -0.24% | -0.83% | -1.51% | 0.07% | |
| CAD | 0.82% | 0.03% | -0.01% | 0.24% | -0.60% | -1.27% | 0.29% | |
| AUD | 1.42% | 0.62% | 0.58% | 0.83% | 0.60% | -0.66% | 0.92% | |
| NZD | 2.06% | 1.28% | 1.24% | 1.51% | 1.27% | 0.66% | 1.59% | |
| CHF | 0.51% | -0.29% | -0.33% | -0.07% | -0.29% | -0.92% | -1.59% |
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.
