Gold Prices Struggle to Shine Amid Strong US Economic Data
In the ever-evolving landscape of financial markets, gold has found itself in a precarious position. Despite recent positive economic indicators from the United States, the precious metal is struggling to maintain its footing. This situation is largely influenced by hawkish sentiments surrounding the Federal Reserve’s monetary policy.
The latest JOLTS survey painted a robust picture of the US job market, revealing that job openings surged to 8.10 million in November. This figure not only surpassed forecasts of 7.73 million but also eclipsed October’s count of 7.84 million. Such encouraging data has led market participants to dismiss the likelihood of an interest rate cut by the Federal Reserve in the immediate future. Currently, there is only a 37% chance of a 25 basis point reduction in March, according to insights from the CME Group’s FedWatch Tool.
As optimism around President-elect Donald Trump’s trade policies grows, US Treasury bond yields are on the rise. This upward trend in yields, coupled with expectations of higher interest rates, is placing significant pressure on gold prices, which do not offer any yield themselves.
While the US Dollar has paused its previous ascent, providing a slight reprieve for gold buyers, other factors are dampening demand for the yellow metal. Economic concerns in China and dwindling physical gold demand from India are critical hurdles. In India, domestic gold prices have skyrocketed due to the rapid depreciation of the Indian Rupee (INR), making purchases increasingly burdensome for local consumers.
Looking ahead, geopolitical tensions—especially in the Middle East—coupled with tariff threats from Trump’s administration could reignite risk aversion among investors. This scenario may lead to fresh selling pressure on global stocks and boost safe-haven demand for both gold and the US Dollar.
Today’s Upcoming Data:
As we approach critical economic releases, including the US ADP Non-Farm Employment Change data and Fed Minutes, all eyes will be on how these events impact market sentiment. The private sector is expected to add around 139K jobs in December, following a slightly higher gain of 146K in November. If these job figures comes negative as forecasted , we could see further upward pressure on gold prices. On the other hand, unemployment claims forecasted to rise which may push gold prices for downward momentum as investors recalibrate their expectations.
While gold traditionally serves as a safe haven during times of uncertainty, current economic dynamics and policy expectations are creating an uphill battle for this precious metal. As investors navigate these turbulent waters, only time will tell if gold can reclaim its luster amidst a backdrop of rising yields and a strengthening US Dollar.
Technical Outlook: XAU/USD- 4 Hour Timeframe – Gold Spot
The current price action suggests a consolidation phase between the $2,645 support and $2,665 resistance levels. Such consolidation often precedes a breakout, though the direction remains uncertain at this stage.
The support zone, marked near the $2,645 level, is serving as a foundation for the current price consolidation. This area has repeatedly shown buying interest, preventing the price from falling further. The resistance zone is prominently highlighted near the $2,665 level. This area has acted as a barrier for further upward movement in recent trading sessions. Price attempted to break through this level but has struggled to sustain momentum, indicating significant selling pressure around this zone.
The XAU/USD pair is currently at a critical juncture, trading within a tight range of support and resistance. While the broader trend indicates a corrective phase, the support levels have shown resilience, hinting at a potential bullish reversal. Traders should monitor these key levels closely and wait for a breakout or breakdown for directional clarity.
Until then, Happy Trading!
Commodity Samachar Securities
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