GOLD Price Analysis – Dec 06, 2024
Daily Price Outlook
Gold price (XAU/USD) maintained its upward rally and drew some further bid around the $2,639 level, hitting an intra-day high of $2,645. The reason for this upward trend can be attributed to anticipation surrounding the upcoming US Nonfarm Payrolls (NFP) data for November, which is set to be released at 13:30 GMT.
Traders are keenly awaiting this key data to gauge the direction of US interest rates, as it could provide further insights into the Federal Reserve's actions at its policy meeting on December 18.
At the same time, geopolitical tensions are helping gold price, with the situation in the Middle East escalating. The ceasefire between Israel and Hezbollah appears weak, as both sides accuse each other of breaching the truce. This uncertainty continues to support gold’s safe-haven appeal, adding volatility to the precious metal’s price.
US Economic Data and Fed Rate Cut Expectations Boost Gold's Appeal
On the US front, the broad-based US dollar, as measured by the US Dollar Index (DXY), has been holding strong at the key support level of 105.70. This comes ahead of the highly anticipated US Nonfarm Payrolls (NFP) data, due for release at 13:30 GMT.
Investors are closely watching this data to gain insights into the future direction of US interest rates, particularly with the Federal Reserve’s (Fed) policy meeting scheduled for December 18.
There is a 72% chance that the Fed will cut interest rates by 25 basis points (bps) to 4.25%-4.50%, according to the CME FedWatch tool. Lower interest rates are generally positive for gold, as they reduce the opportunity cost of holding the precious metal.
Economists expect the US economy to have added 200,000 jobs in November, a sharp rise from the 12,000 added in October, which was affected by hurricanes. The unemployment rate is expected to tick up slightly to 4.2% from 4.1%.
Investors are also paying close attention to the Average Hourly Earnings data, which is forecasted to have increased by 3.9% year-on-year, slower than the 4% growth seen in October. This could give further clues about wage growth and inflationary pressures.
Consequently, the anticipation of a 25 basis point rate cut by the Fed could boost gold prices, as lower interest rates make holding gold more attractive by reducing the opportunity cost. Strong job growth and slower wage growth could further support gold's appeal.
Geopolitical Tensions Drive Demand for Gold as a Safe-Haven Asset
On the geopolitical front, tensions in the Middle East are escalating as the ceasefire agreement between Israel and Hezbollah begins to unravel. Both sides are accusing each other of violating the truce terms.
The Israeli military launched a series of airstrikes on Hezbollah in response to an attack, where two projectiles targeted an Israeli military post near Lebanon. This renewed conflict is adding to the region’s instability, with the potential to cause further volatility.
At the same time, the ongoing war between Russia and Ukraine continues to heighten global uncertainty.
Russian Foreign Minister Sergey Lavrov recently warned that Russia would use all available means to prevent the West from achieving its goal of a “strategic defeat” of the country.
This statement adds to the already tense situation, as the war shows no signs of de-escalating, keeping investors on edge.
These heightened geopolitical risks contribute to a growing sense of uncertainty around the world, which boosts the appeal of safe-haven assets like gold.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is trading at $2,638.45, down 0.24% in the session, reflecting cautious sentiment as the price hovers below the critical pivot point at $2,644.33.
Technical indicators point to a neutral bias, with the Relative Strength Index (RSI) at 50, suggesting equilibrium between buyers and sellers.
Immediate resistance is seen at $2,666.85, followed by $2,688.97 and $2,707.52, which represent significant hurdles for bullish momentum.
On the downside, support levels are positioned at $2,617.61, $2,595.99, and $2,575.78, marking areas to watch for potential bearish pressure. The 50-day EMA at $2,641.72 reinforces short-term resistance near the pivot, indicating a key zone for directional shifts.
Traders should monitor the $2,644.33 pivot closely. A sustained move above this level could target resistance at $2,666.85, validating a bullish breakout. Conversely, a break below $2,617.61 may trigger further declines, with $2,595.99 as the next support level.
Related News
- S&P500 (SPX) Price Analysis – Dec 06, 2024
JOIN LONGHORNFX TODAY
24/7 live support, lightning fast withdrawals, guaranteed safe and reliable trading platforms with a true ECN broker.