Gold Price Forecast: XAU/USD needs acceptance above 2,660 to unleash additional recovery
- Gold price sits at eight-day highs above $2,650 early Thursday, eyeing a weekly rebound
- Geopolitical risks continue to support the traditional safe-haven Gold price ahead of Fed speak
- Gold price must scale 50-day SMA resistance at $2,660 as daily RSI peeps into the bullish zone
In the Asian trading hours of Thursday, the gold price is at its greatest point in over a week, surpassing the $2,650 threshold. In the absence of top-tier US economic data releases, the speeches of numerous US Federal Reserve (Fed) policymakers and geopolitical updates regarding Russia and Ukraine continue to be the primary focus of attention.
Buyers of gold appear to be invincible.
The US Dollar (USD) and the US Treasury bond yields have experienced a slight decline, which has facilitated the extension of the gold price’s recovery mode for a fourth consecutive session early Thursday.
On Wednesday, the USD experienced a significant increase in value, as traders bolstered their optimism regarding the Trump trade by analysing the hawkish Fed commentary and the subpar results of the 20-year bond auction. This was accompanied by a steep increase in US bond yields.
The markets have reduced their expectations of a 25 basis points (bps) interest rate cut in December as a result of the hawkish tone of the majority of Fed officials who spoke on Wednesday.
“The US central bank should pursue a cautious approach on monetary policy,” stated Fed Governor Michelle Bowman. She was the most pessimistic of the group.
Fed Governor Lisa Cook stated that the central bank’s decision at its December meeting will be uncertain due to the fact that the scheduling of future interest-rate reductions will be contingent upon forthcoming data.
Nevertheless, Kansas Fed President Jeffrey Schmid stated that the current time is opportune to reduce the level of policy restrictions. Solid growth, inflation trending downward, and full employment are my predictions. Susan Collins, the president of the Boston Federal Reserve, also expressed a dovish stance, stating that “some additional rate cuts are necessary as the policy is still restrictive.”
The CME Group’s FedWatch Tool indicates that markets are currently pricing in a 52% likelihood of a 25 basis point reduction in the Federal Reserve’s December rate, a decrease from the 83% that was observed a week ago.
The gold price persevered and capitalised on the escalating geopolitical tensions between Russia and Ukraine, despite the hawkish shift in Fed expectations and Trump’s optimism regarding trade.
On Wednesday, Russia conducted “a massive information-psychological attack” against Ukraine by disseminating a fabricated warning, purportedly from Ukrainian military intelligence, regarding an imminent mass air attack.
This response was received on Tuesday, following the confirmation by the Russian Defence Ministry that Ukraine had fired six Army Tactical Missile Systems (ATACMS) missiles manufactured in the United States at the Bryansk region. This occurred just days after US President Joe Biden permitted Ukraine to employ American-made weapons to conduct strikes within Russia.
A nuclear response to Ukraine’s non-nuclear assaults was also threatened by the Kremlin.
The gold price is expected to remain supported in the face of the ongoing conflict between Russia and Ukraine. However, the forthcoming Federal Reserve commentaries may serve to bolster vendors.
Furthermore, the USD may regain momentum on a flight to safety, which would limit the upward trajectory of the Gold price, if risk-aversion reaches a climax in the upcoming sessions.
After the revenue forecast of the American AI behemoth Nvidia Corp. was disappointing, traders continue to experience anxiety. In the third quarter of the fiscal year, Nvidia’s revenue increased by 94% to $35.1 billion. The data centre division, which is the company’s largest division, saw its revenue double from the previous year to $30.8 billion.
