Gold News: Will Non-Farm Payrolls Be the Catalyst to Break Gold’s Narrow Range?

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Published: Dec 3, 2024, 12:29 GMT+00:00

Key Points:

Gold prices hover below the 50-day MA at $2,669.25, awaiting a catalyst like Friday’s Non-Farm Payrolls for direction.
A breakout above $2,669.25 could push gold toward $2,693.40 and strengthen bullish momentum.
Fed rate cut odds for December rise to 73%, keeping gold rangebound between $2,629.13 support and $2,663.51 resistance.

Gold Prices Trade Higher on Rate Cut Expectations and Key Technical Levels

Gold prices edged higher on Tuesday, buoyed by expectations of a December rate cut by the U.S. Federal Reserve. However, trading remains constrained within a defined range, with key technical levels providing both support and resistance.

At 12:17 GMT, XAU/USD is trading $2642.07, up $3.11 or +0.12%.

Fed Rate Cut Expectations and Treasury Yields Influence Gold

The market is increasingly pricing in a 73% probability of a 25-basis-point rate cut during the Federal Reserve’s December meeting, up from 66% following dovish comments from Fed Governor Christopher Waller. Supporting this outlook, UBS projects a 25-bps cut this month, followed by 100 bps of additional easing through 2025.

Simultaneously, the benchmark 10-year Treasury yield is hovering near a one-month low, despite ticking up slightly. This development enhances the appeal of non-yielding bullion, as lower yields reduce the opportunity cost of holding gold. The U.S. dollar also weakened 0.2%, further bolstering gold’s attractiveness.

Geopolitical Tensions Add Support for Gold

Ongoing geopolitical uncertainties, including a faltering U.S.-brokered ceasefire between Israel and Hezbollah, continue to sustain safe-haven demand. Strikes in southern Lebanon have added to the instability, providing an additional layer of support for gold.

Technical Levels Keep Gold Range-Bound

Daily Gold (XAU/USD)

Gold prices are currently trading between critical retracement zones. On the upside, resistance is noted at $2,663.51 to $2,693.40, with further barriers at $2,721.42 if momentum strengthens. On the downside, support is established between $2,629.13 and $2,607.35. A sustained move below this zone could trigger an accelerated decline toward $2,538.50.

The market is also trading below its 50-day moving average of $2,669.25. A move above this level would indicate buyer strength, potentially driving prices toward higher resistance levels. Conversely, failure to break above the 50-day moving average could lead to further downside pressure.

Market Forecast

In the short term, gold prices are expected to trade within a narrow range, with resistance near $2,650 and support around $2,620. Market direction will hinge on upcoming U.S. economic data, including job openings, the ADP employment report, and Friday’s payrolls. Should dovish Fed expectations persist and geopolitical risks escalate, gold could gain further momentum, favoring a bullish outlook. However, failure to break resistance levels may keep prices subdued.

More Information in our Economic Calendar.

About the Author

James Hyerczykauthor

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.