gold prices are experiencing downward pressure during the Asian session on Friday, largely influenced by a stronger US Dollar and shifting expectations regarding the Federal Reserve’s interest rate cuts. The upcoming US Retail Sales report for October is anticipated to have a significant impact on market sentiment later in the day.
Trading around $2,570, gold (XAU/USD) has struggled to recover after hitting a two-month low in the previous session. The robust performance of the US Dollar, combined with increasing uncertainty about the Federal Reserve’s strategy for rate reductions, has contributed to the metal’s weakness. Growing concerns about inflation, particularly in the context of potential policy shifts from previous administrations, have tempered expectations for aggressive rate cuts, which traditionally support gold prices. Higher interest rates diminish the attractiveness of non-yielding assets like gold , further compounding the pressure on its value.
Geopolitical tensions, specifically in the Middle East and the ongoing conflict in Ukraine, may provide some support to gold prices, as investors often turn to this asset during times of uncertainty. In addition to the retail sales data, attention will also be given to other economic indicators such as the NY Empire State Manufacturing Index and Industrial Production figures. Speeches by Federal Reserve officials may offer further insight into future monetary policy direction.
Recent economic data indicates a rise in the US Producer Price Index (PPI) and a slight uptick in jobless claims, reinforcing the complex picture faced by the Fed. As of now, the market suggests a lower probability of upcoming rate cuts, with expectations at about 59.1% for a 25-basis point reduction by December.
gold ’s technical setup shows a precarious position, hovering near its 100-day Exponential Moving Average (EMA). A breakdown below this critical support level could trigger a decline towards $2,485, with potential further losses to $2,353 and the psychological level of $2,300. Conversely, resistance is identified around $2,665, with a breakthrough there opening the path for a rally towards $2,750.
