Gold (XAU) Daily Forecast: Rising US Dollar Can’t Shake Gold’s Upward Trend

Inflation and Fed Rate Speculation Drive Gold Demand

The US dollar reached its highest level since October 2023, buoyed by expectations that inflation risks could temper the Federal Reserve’s pace of rate cuts. According to the CME FedWatch Tool, traders now assign a 55% probability of a 25-basis-point rate cut in December.

Chicago Fed President Austan Goolsbee highlighted progress toward the Fed’s 2% inflation target but emphasized the need to slow rate cuts. New York Fed President John Williams also noted a balanced labor market, easing inflationary pressures but maintaining cautious optimism.

Meanwhile, US Treasury yields remain elevated, reinforcing gold’s appeal as a hedge against inflation and economic uncertainties.

Economic Data Paints Mixed Picture

US jobless claims dropped by 6,000 last week to 213,000, the lowest in seven months, while existing home sales rebounded for the first time since 2021.

However, the Philly Fed Manufacturing Index revealed a surprise contraction in November, highlighting continued volatility in economic performance. Investors now await Friday’s flash PMIs for further insights.

Geopolitical Tensions Add Safe-Haven Demand

Heightened tensions between Russia and Ukraine are driving additional demand for gold. Recent missile exchanges have intensified uncertainty in global markets, prompting investors to seek refuge in gold as a risk-averse asset.