Gold prices have surged above the $2,650 mark, maintaining modest gains and reaching a two-day high as geopolitical tensions, US President-elect Donald Trump’s tariff plans, and falling US Treasury bond yields continue to fuel demand for the safe-haven asset. The precious metal has benefitted from increased haven flows, supported by concerns over escalating trade wars and a softer US dollar, which remains near its weekly low.
The rise in gold comes as US bond yields continue to slide, keeping pressure on the dollar and providing additional support for the commodity. After a brief dip to $2,600—a one-week low—gold rebounded overnight, and market sentiment appears to favor the commodity as it builds on these gains.
The global equity market’s weaker tone is another factor contributing to gold’s price strength. However, the market remains cautious ahead of key US economic data, with investors awaiting the Personal Consumption Expenditure (PCE) Price Index report before making any significant moves. Additionally, the Federal Reserve’s less dovish stance on rate cuts, as reflected in the minutes of the November 6-7 Federal Open Market Committee (FOMC) meeting, may act as a headwind for gold prices.
Geopolitical Tensions and Economic Indicators Support Gold
A series of geopolitical developments has also lent support to the rise in gold prices. Trump’s vow to impose tariffs on imports from Canada, Mexico, and China has spurred concerns over a protracted trade war, prompting further haven flows into gold. In Ukraine, Russia’s intensifying military operations, including a hypersonic missile attack last week and the reported use of North Korean troops, have further raised global tensions. Meanwhile, Ukraine’s strikes deep within Russia using Western-supplied missiles have escalated fears of an expanded conflict.
In the Middle East, tensions have eased slightly after US President Joe Biden brokered a ceasefire agreement between Lebanon and Israel, effective as of 02:00 GMT on Wednesday, providing some temporary relief to the region.
On the economic front, the Conference Board reported a stronger-than-expected US Consumer Confidence Index for November, climbing to 111.7 from 109.6 in October, the highest since July 2023. Despite this, the minutes from the November FOMC meeting revealed a divided outlook among Federal Reserve officials regarding the future trajectory of interest rates, with uncertainty surrounding economic conditions.
The CME Group’s FedWatch Tool currently shows a 63% probability of a 25-basis-point rate cut at the Federal Reserve’s December meeting, which could influence both the US dollar and gold prices.
Technical Outlook for Gold
From a technical standpoint, gold’s rebound from the 61.8% Fibonacci retracement level is seen as a bullish signal, although oscillators on the daily chart are not yet confirming a strong upward bias. Resistance is expected near the 100-period Simple Moving Average (SMA) on the 4-hour chart, which currently sits around $2,645. A break above this level could push gold towards $2,665, with further gains potentially reaching the $2,677-$2,678 range before targeting the $2,700 mark.
On the downside, support is seen around the $2,624-$2,622 region, followed by the $2,600 level. A decisive break below $2,600 would signal further bearish pressure, potentially exposing the 100-day SMA near $2,569. Should this support fail to hold, gold could face further declines, targeting the $2,537-$2,536 zone, and continuing the correction from its October peak of $2,800.
Looking Ahead
As traders await critical US macroeconomic data, gold’s trajectory will be influenced by both global political developments and the Federal Reserve’s actions. While gold is currently buoyed by geopolitical risk and softer US yields, its future movement will depend on a combination of economic indicators, market sentiment, and the unfolding trade and military conflicts across the globe.
Related topics:
- US Elections: Impact on Gold Prices Ahead of November Vote
- Dubai: Gold Prices Surge to Record Highs on Diwali
- Toubani Resources Projects A$240 Million Annual Revenue from Mali Gold for Nine Years
