Gold maintains a modest recovery, supported by expectations of a Federal Reserve rate cut
FUNDAMENTAL OVERVIEW:
- Gold edges higher on Thursday as markets adjust to increasing odds of a Fed rate cut in December.
- A potential easing in Trump’s stance on tariffs may contribute to reduced expectations for interest rate hikes.
- XAU/USD is gradually rising along a key trendline, though it remains at risk of further declines.
Gold prices rose slightly on Thursday, buoyed by weaker U.S. inflation data from the previous session, strengthening expectations for a Federal Reserve rate cut in December.
Gold (XAU/USD) continues its modest recovery from Tuesday’s lows, trading in the $2,640 range on Thursday. The yellow metal is benefiting from growing market expectations that the Federal Reserve will implement a rate cut at its December meeting. Lower interest rates are favorable for gold, as they decrease the opportunity cost of holding the non-yielding asset, enhancing its appeal to investors.
Gold is experiencing a modest recovery on Thursday as the likelihood of a 25-basis point (bps) rate cut by the Fed before Christmas increases.
According to the CME Fed Watch tool, the market-based probability of a 25-basis point rate cut has climbed to 70% on Thursday, up from a previous range of 55% to 66%. This implies a 30% chance that the Fed will keep interest rates unchanged.
Benchmark US Treasury bond yields are slightly declining, likely due to a shift in trade tariff rhetoric, which may be influencing both gold prices and US yields.
GOLD TECHNICAL ANALYSIS DAILY CHART:
Technical Overview:
Gold is currently trading within a down channel.
Gold is positioned below 10&20 Moving Averages (SMA).
The Relative Strength Index (RSI) is in the Buying zone, while the Stochastic oscillator suggests a Neutral trend.
Immediate Resistance level: 2657.00
Immediate support level: 2630.25
HOW TO TRADE GOLD
Gold prices initially surged higher, but encountered strong resistance, reversing the upward trend. A subsequent decline found support, leading to a temporary rebound. However, the upward momentum proved short-lived, and prices resumed their downward trajectory. Gold is now facing resistance and a potential rejection could result in continued price declines.