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Gold price trades with modest intraday gains, lacks follow-through buying

November 2, 2023| Forex Market

  • Gold price gains positive traction on Thursday amid sliding US bond yields and a weaker USD.
  • A further rise in equity markets caps any meaningful gains for the safe-haven precious metal.
  • Geopolitical tensions and China’s economic woes should limit the downside for the XAU/USD.

Gold price (XAU/USD) edges higher during the Asian session on Thursday, albeit lacking a  follow-through and remains below the $2,000 psychological mark. A generally positive risk tone is seen as a key factor acting as a headwind for the precious metal. The commodity, however, manages to hold above a one-week trough, around the $1,970-1,969 region touched the previous day, warranting caution for aggressive bearish traders.

The US Treasury bond yields and the US Dollar (USD) continue to drift lower in the wake of expectations that the Federal Reserve (Fed) may be done raising interest rates. This, in turn, is seen lending some support to the non-yielding Gold price. Apart from this, the risk of a further escalation in the Israel-Hamas conflict, along with the worsening economic conditions in China, should limit any meaningful slide for the safe-haven XAU/USD.

Daily Digest Market Movers: Gold price attracts buyers amid the post-FOMC slide in the US bond yields and the USD

  • Gold price struggles to capitalize on its modest intraday uptick amid the prevalent risk-on environment and the uncertainty over the Federal Reserve’s future rate-hike path.
  • The Fed decided to keep the key overnight interest rates unchanged for the second time in a row and noted that financial conditions may be tight enough already to control inflation.
  • The markets now expect the US central bank to start cutting rates in June 2024, which leads to a further steep decline in the US Treasury bond yields and undermine the US Dollar.
  • The yield on the rate-sensitive two-year US government bond falls to its lowest level since September 8, while the benchmark 10-year Treasury yield moves away from the 5% threshold.
  • The Fed upgraded its assessment of the economic activity and acknowledged the US economy’s unexpected resilience, keeping the prospect of another hike on the table.
  • On the geopolitical front, Bolivia cut its diplomatic ties with Israel as a result of civilian losses caused by what it describes as aggressive and disproportionate military action in Gaza.
  • The market focus now shifts to the US monthly employment details – the NFP report – due on Friday, which should provide some meaningful impetus to the precious metal.

Technical Analysis: Gold price needs to find acceptance above the $2,000 psychological mark for bulls to seize back control

From a technical perspective, the $2,000 mark is likely to act as an immediate strong barrier. This is followed by a multi-month top, around the $2,008-2,010 area, which if cleared decisively has the potential to lift the Gold price to the next relevant barrier near the $2,022 region. On the flip side, the overnight swing low, around the $1,970 region, now seems to offer some support to the XAU/USD. Some follow-through selling will expose the $1,964 intermediate support before the commodity drops to the $1,954-1,953 zone.

US Dollar price today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Canadian Dollar.

USD   -0.14% -0.09% -0.04% -0.16% -0.17% -0.22% -0.35%
EUR 0.14%   0.04% 0.10% -0.03% -0.03% -0.08% -0.21%
GBP 0.10% -0.05%   0.06% -0.07% -0.07% -0.12% -0.25%
CAD 0.05% -0.10% -0.06%   -0.12% -0.12% -0.17% -0.31%
AUD 0.17% 0.05% 0.08% 0.14%   0.02% -0.05% -0.17%
JPY 0.16% 0.05% 0.07% 0.11% -0.01%   -0.05% -0.20%
NZD 0.25% 0.04% 0.09% 0.17% 0.05% 0.05%   -0.17%
CHF 0.35% 0.22% 0.25% 0.31% 0.17% 0.19% 0.12%  

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).

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