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Gold Price Edges Higher Within Familiar Range; Upside Remains Limited Ahead of Fed’s Powell

Gold Price Edges Higher Within Range

Gold Price Edges Higher Within Familiar Range; Upside Remains Limited Ahead of Fed’s Powell

Gold price (XAU/USD) continues to trade with a positive bias for the second consecutive day, hovering within a familiar range established over the past week. However, bullish momentum remains subdued as traders await critical cues from Federal Reserve Chair Jerome Powell’s speech and Friday’s US Nonfarm Payrolls (NFP) report to guide the metal’s next directional move.

Market Dynamics:

  • Fed Rate-Cut Expectations: Market sentiment remains cautious, with expectations that the Fed may take a measured approach to rate cuts amid concerns that US President-elect Donald Trump’s policies could exacerbate inflationary pressures.
  • US Dollar and Treasury Yields: Modest gains in US Treasury bond yields support the US Dollar, acting as a headwind for gold. However, geopolitical tensions and safe-haven demand continue to limit the downside.

Economic Updates:

  • Labor Market Strength: Tuesday’s JOLTS report highlighted a significant rise in US job openings, signaling resilience in the labor market. This, coupled with stalled progress toward the Fed’s 2% inflation target, suggests a potential pause in rate cuts next year.
  • Fed Comments: Fed officials, including Mary Daly and Austan Goolsbee, maintain that policy decisions will remain data-driven. Markets are pricing in a 70% probability of a 25 bps rate cut in December, according to CME Group’s FedWatch Tool.

Technical Analysis:

  • Support Levels:
    • Initial support lies near $2,622-$2,621 (overnight swing low).
    • A break below this could see gold testing $2,600 and further declines toward the 100-day SMA at $2,579-$2,578.
    • The November low at $2,537-$2,536 is the next key support zone.
  • Resistance Levels:
    • Immediate resistance is seen at $2,655, followed by $2,666 (last week’s high).
    • A sustained break above $2,677-$2,678 could target the psychological $2,700 mark.
    • Beyond $2,700, the next critical hurdle is $2,721-$2,722, which could pave the way for further bullish momentum.
  • Momentum Indicators: Neutral oscillators on the daily chart suggest continued range-bound movement in the near term.

Outlook:

Gold’s immediate trajectory remains constrained as traders await Powell’s remarks and key US data. The metal’s upside appears capped near $2,666, while downside risks are cushioned by safe-haven demand and geopolitical concerns. A break of the current range could set the tone for a more decisive move.