Gold prices (XAU/USD) saw a slight decline on Thursday as a strengthening U.S. dollar and rising Treasury yields dampened investor interest in the precious metal.
Renewed buying pressure in the dollar has overshadowed gold’s safe-haven appeal, despite market uncertainties around the upcoming U.S. presidential election and geopolitical tensions in the Middle East.
The dollar’s recent rally is attributed to investors anticipating smaller, more gradual rate cuts by the Federal Reserve, paired with concerns over the rising U.S. fiscal deficit. This has driven U.S. Treasury yields upward, adding pressure on non-yielding assets like gold.
In October, private-sector employment surged, with ADP reporting a notable increase of 233,000 jobs, far outpacing the previous month’s 159,000 and exceeding market expectations. This uptick suggests labor market resilience, reinforcing the Fed’s cautious stance on rate cuts. The latest U.S. economic data adds another layer of complexity.
According to the Bureau of Economic Analysis, the U.S. economy expanded at an annual rate of 2.8% in the third quarter, slightly lower than the 3% growth recorded in the previous quarter. This moderated growth supports the view that while economic activity remains robust, it may not warrant aggressive Fed rate cuts, contributing to the dollar’s strength.
Investors are also bracing for the release of key economic indicators, including the U.S. Personal Consumption Expenditure (PCE) Price Index and the Nonfarm Payrolls (NFP) report on Friday.
These reports are expected to provide further clarity on inflation and employment trends, potentially impacting the Fed’s upcoming policy decisions.
Analysts are widely forecasting a 25 basis point cut in the November Fed meeting, but the stronger dollar and Treasury yields continue to curb gold’s upside.
With inflation data and employment figures due shortly, market participants are taking a cautious stance. Gold may face continued headwinds if Treasury yields remain elevated, limiting its appeal relative to dollar-denominated assets.
However, any surprise in economic data could reignite interest in gold, particularly if uncertainty around the U.S. election and geopolitical factors persist.
Gold faces downward pressure as a strong dollar and rising Treasury yields weigh on prices. Break above $2,790.22 may revive bullish momentum, while support lies near $2,772.47.
Gold (XAU/USD) is trading around $2,784, slightly down by 0.09%, and currently navigating a critical resistance near $2,790.22, forming a double-top pattern that could restrict further gains unless broken.
While the 50-day EMA at $2,762.90 provides nearby support, hinting at an underlying bullish trend, the double top presents a potential ceiling.
If prices manage to break above $2,790.22, a bullish push toward $2,803.33 and $2,815.26 is likely. However, a dip below the immediate support at $2,772.47 could trigger further downside, targeting $2,760.49.
Arslan, a webinar speaker and derivatives analyst, has an MBA in Finance and MPhil in Behavioral Finance. He guides financial analysis, trading, and cryptocurrency forecasting. Expert in trading psychology and sentiment.