Gold price edges higher amid overall US Dollar weakness and lower US bond yields
- Gold price catches fresh bids on Thursday and reverses a part of the overnight decline.
- Bets that the Fed is done raising rates prompt fresh USD selling and remain supportive.
- A move beyond the $2,010 resistance is needed to support prospects for further gains.
Gold price (XAU/USD) attracts some dip-buying during the Asian session on Thursday and reverses a part of the previous day's retracement slide from the vicinity of the monthly peak. A two-day-old US Dollar (USD) recovery move from its lowest level since August 31 touched on Tuesday falters near the 100-day Simple Moving Average (SMA) amid firming expectations that interest rates in the US have peaked. This is reinforced by a fresh leg down in the US Treasury bond yields, which undermines the Greenback and acts as a tailwind for the non-yielding yellow metal.
The precious metal, however, remains below the $2,000 psychological mark. This, along with the recent repeated failures ahead of the $2,010 horizontal barrier, warrants some caution before placing fresh bullish bets around the Gold price amid a relatively light trading session ahead in the wake of the US Thanksgiving holiday. Nevertheless, dovish Federal Reserve (Fed) expectations might continue to act as a tailwind for the XAU/USD, suggesting that any meaningful corrective decline might still be seen as a buying opportunity and is more likely to remain limited.
Daily Digest Market Movers: Gold price regains positive traction and draws support from renewed USD weakness
- The emergence of fresh selling around the US Dollar assists the Gold price to regain positive traction during the Asian session on Thursday.
- The hawkish FOMC minutes-inspired USD recovery falters in the wake of expectations that the Federal Reserve (Fed) will not hike rates further.
- Policymakers reiterated the stance to keep rates higher for longer and remain committed to tightening policy further if progress in controlling inflation falters.
- The current market pricing, however, indicates a greater than 50% chance that the US central bank will start cutting interest rates by May 2024.
- Dovish Fed expectations, meanwhile, overshadow the better-than-expected US labor market and consumer sentiment data released on Wednesday.
- The number of Americans filing new claims for unemployment benefits fell more than expected last week, to 209K, or the lowest level in more than a month.
- The University of Michigan's survey of consumer sentiment showed that US consumers' inflation expectations rose for a second straight month in November.
- Other US data showed orders for long-lasting US manufactured goods fell more than expected in October, pointing to slowing economic demand.
- Lighter trading volumes on the back of the US Thanksgiving holiday and repeated failures ahead of the $2,010 level warrant caution for bullish traders.
Technical Analysis: Gold price needs to make it through the $2,010 strong barrier for bulls to regain near-term control
From current levels, any subsequent move beyond the $2,000 mark might continue to confront stiff resistance near the $2,007 area. Some follow-through buying, leading to a subsequent breakout through the $2,009-2,010 barrier, or a multi-month peak touched in October, will be seen as a fresh trigger for bullish traders. The Gold price might then accelerate the positive move further towards the $2,022 intermediate resistance en route to the next relevant hurdle near the $2,040 region.
On the flip side, the $1,989-1,988 zone is likely to protect the immediate downside ahead of the $1,979-1,978 region and the weekly low, around the $1,965 area. Failure to defend the said support levels might prompt aggressive technical selling and drag the Gold price back towards the 200-day Simple Moving Average (SMA), currently around the $1,940 level. This is closely followed by the 50- and 100-day SMA confluence, around the $1,933-1,932 region, which if broken decisively might shift the near-term bias in favour of bearish traders.
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 New Zealand Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF |
| USD | -0.16% | -0.12% | -0.06% | -0.16% | -0.23% | -0.48% | -0.17% |
| EUR | 0.14% | 0.03% | 0.08% | -0.02% | -0.09% | -0.33% | -0.02% |
| GBP | 0.11% | -0.04% | 0.04% | -0.05% | -0.11% | -0.36% | -0.05% |
| CAD | 0.05% | -0.10% | -0.06% | -0.11% | -0.17% | -0.42% | -0.12% |
| AUD | 0.18% | 0.01% | 0.05% | 0.11% | -0.06% | -0.31% | 0.00% |
| JPY | 0.23% | 0.07% | 0.11% | 0.17% | 0.05% | -0.23% | 0.06% |
| NZD | 0.47% | 0.32% | 0.36% | 0.39% | 0.31% | 0.24% | 0.30% |
| CHF | 0.17% | 0.02% | 0.05% | 0.10% | 0.00% | -0.06% | -0.30% |
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).
Gold FAQs
Why do people invest in Gold?
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Who buys the most Gold?
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
How is Gold correlated with other assets?
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
What does the price of Gold depend on?
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
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