Select Language

Gold price holds comfortably above $2,600 mark; lacks bullish conviction

Breaking news

Gold price holds comfortably above $2,600 mark; lacks bullish conviction

  • X
  • facebook
  • LINE
  • RSS

  • X
  • facebook
  • LINE
  • RSS
New update 2024.12.23 14:08
Gold price holds comfortably above $2,600 mark; lacks bullish conviction

update 2024.12.23 14:08

  • Gold price oscillates in a range at the start of a new week amid mixed fundamental cues.
  • Geopolitical risks continue to underpin the XAU/USD amid subdued US Dollar price action.
  • The Fed's hawkish stance backs elevated US bond yields and caps the pair's gains.

Gold price (XAU/USD) struggles to capitalize on last week's modest recovery from a one-month trough and oscillates in a range around the $2,625 region during the Asian session on Monday. The US Dollar (USD) bulls remain on the defensive below a two-year high touched on Friday and turn out to be a key factor acting as a tailwind for the commodity. Apart from this, geopolitical risks stemming from the protracted Russia-Ukraine war and tensions in the Middle East further lend support to the safe-haven precious metal. 

Meanwhile, the Federal Reserve's (Fed) hawkish signal, that it would slow the pace of rate cuts in 2025, remains supportive of elevated US Treasury bond yields. This, along with a generally positive tone around the equity markets, seems to cap gains for the non-yielding yellow metal. Hence, it will be prudent to wait for strong follow-through buying before positioning for any further appreciating move. Traders now look forward to the release of the Conference Board's Consumer Confidence Index for short-term impetus.

Gold price struggles to lure buyers amid Fed's hawkish signal and elevated US bond yields

  • The US Dollar pulled back from a two-year high on Friday following the release of the US Personal Consumption Expenditure (PCE) Price Index, which pointed to signs of inflation moderation. 
  • The US Bureau of Economic Analysis (BEA) reported that inflation in the US, as measured by the change in the PCE Price Index, edged higher to 2.4% on a yearly basis in November from 2.3% previous. 
  • Meanwhile, the core PCE Price Index, which excludes volatile food and energy prices, rose 2.8% during the reported period, matching October's reading but arriving below the expectation of 2.9%. 
  • Furthermore, Personal Income decelerated sharply from 0.7% in October and grew 0.3% last month, while Consumer Spending rose 0.4% after a downwardly revised reading of 0.3% in October.
  • Russian President Vladimir Putin has pledged retaliation after Ukraine staged a major drone attack on the city of Kazan, which damaged residential buildings and shut down the airport.
  • Israeli forces bombed the so-called "safe zone" in southern Gaza, causing tents to go up in flames and killing at least seven Palestinians, taking the death toll over the past day to at least 50.
  • The Federal Reserve last week signaled that it would slow the pace of rate cuts in 2025, lifting the benchmark US Treasury bond yield to its highest level in more than six months last week. 
  • Monday's US economic docket features the release of the Conference Board's Consumer Confidence Index and might provide some impetus later during the early North American session. 

Gold price technical setup warrants caution before positioning for additional near-term gains

fxsoriginal

From a technical perspective, acceptance above the 23.6% Fibonacci retracement level of the recent pullback from a one-month peak favors bullish traders. That said, negative oscillators on daily/4-hour charts warrant some caution before positioning for any further appreciating move. Hence, any subsequent move up might still be seen as a selling opportunity and seems limited. 

Meanwhile, the 38.2% Fibo. level, around the $2,637 area, now seems to act as an immediate hurdle ahead of the $2,643-$2,647 congestion zone, which coincides with the downward sloping 200-period Simple Moving Average (SMA) on the 4-hour chart. The latter should act as a key pivotal point, which if cleared decisively,  should pave the way for a further appreciating move.

On the flip side, the $2,616-$2,615 region that is deemed as a pullback area, or the 23.6% Fibo. level could offer immediate support. This is followed by the $2,600 round-figure mark, below which the Gold price could retest the monthly swing low, around the $2,583 zone touched last week. Some follow-through selling will be seen as a fresh trigger for bears and set the stage for deeper losses in the near term.

Gold FAQs

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.

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.

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.

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.

 


Date

Created

 : 2024.12.23

Update

Last updated

 : 2024.12.23

Related articles


Show more

FXStreet

Financial media

arrow
FXStreet

FXStreet is a forex information website, delivering market analysis and news articles 24/7.
It features a number of articles contributed by well-known analysts, in addition to the ones by its editorial team.
Founded in 2000 by Francesc Riverola, a Spanish economist, it has grown to become a world-renowned information website.

Was this article helpful?

We hope you find this article useful. Any comments or suggestions will be greatly appreciated.  
We are also looking for writers with extensive experience in forex and crypto to join us.

please contact us at [email protected].

Thank you for your feedback.
Thank you for your feedback.

Most viewed

EUR/JPY edges lower to near 163.00 following ECB Lagarde interview

EUR/JPY extends its losses following an interview of European Central Bank (ECB) President Christine Lagarde published by the Financial Times on Monday.
New
update2024.12.23 18:02

NZD/USD Price Forecast: Remains subdued near 0.5650, descending channel's lower boundary

The NZD/USD pair edges lower to near 0.5650 during the European hours on Monday.
New
update2024.12.23 17:15

EUR/USD consolidates ahead of holiday-shortened week as Fed supports shallow rate-cut cycle

EUR/USD trades quietly at the start of the week around 1.0440 in Monday's European session.
New
update2024.12.23 16:51

EUR/GBP holds above 0.8300 on BoE dovish bets

The EUR/GBP cross extends the rally to around 0.8305 during the early European session on Monday.
New
update2024.12.23 16:34

Forex Today: Mood remains upbeat to start holiday-shortened week

Here is what you need to know on Monday, December 23: Improving risk mood caused the US Dollar (USD) to lose interest heading into the weekend.
New
update2024.12.23 16:33

AUD/JPY hovers around 98.00 as traders await Meeting Minutes from both central banks

AUD/JPY retraces its recent losses from the previous session, trading around 98.00 during the early European hours on Monday.
New
update2024.12.23 16:32

USD/CHF holds positive ground above 0.8900 on Fed's hawkish approach

The USD/CHF pair gains traction to around 0.8935, snapping the two-day losing streak during the early European session on Monday.
New
update2024.12.23 14:57

EUR/USD Price Analysis: Tests nine-day EMA near 1.0450, improved RSI supports upside

EUR/USD extends its gains for the third consecutive day, trading around 1.0440 during the Asian hours on Monday.
New
update2024.12.23 14:34

Lagarde speech: Still believe that we should be very vigilant about services

In an interview with the Financial Times (FT) on Monday, European Central Bank (ECB) President Christine Lagarde said that she "still believes that we should be very vigilant about services." .
New
update2024.12.23 14:24

Gold price holds comfortably above $2,600 mark; lacks bullish conviction

Gold price (XAU/USD) struggles to capitalize on last week's modest recovery from a one-month trough and oscillates in a range around the $2,625 region during the Asian session on Monday.
New
update2024.12.23 14:07

Disclaimer:arw

All information and content provided on this website is provided for informational purposes only and is not intended to solicit any investment. Although all efforts are made in order to ensure that the information is correct, no guarantee is provided for the accuracy of any content on this website. Any decision made shall be the responsibility of the investor and Myforex does not take any responsibility whatsoever regarding the use of any information provided herein.

The content provided on this website belongs to Myforex and, where stated, the relevant licensors. All rights are reserved by Myforex and the relevant licensors, and no content of this website, whether in full or in part, shall be copied or displayed elsewhere without the explicit written permission of the relevant copyright holder. If you wish to use any part of the content provided on this website, please ensure that you contact Myforex.

  • Facebook
  • Twitter
  • LINE

Myforex uses cookies to improve the convenience and functionality of this website. This website may include cookies not only by us but also by third parties (advertisers, log analysts, etc.) for the purpose of tracking the activities of users. Cookie policy

I agree
share
Share
Cancel