gold prices are experiencing a mixed week, rebounding from earlier lows while facing challenging resistance levels. After plunging to a weekly low of $2,605 on Tuesday, gold has made attempts to rise, testing the $2,670 resistance on Friday morning. The bounce-back appears supported by a subdued performance of the US dollar and declining US Treasury bond yields, factors that have historically bolstered gold prices.
Market sentiment remains influenced by expectations of a potential Federal Reserve interest rate cut in December. Recent announcements regarding tariffs from the US government seem to have exerted minimal impact on the dollar’s performance, which continues to remain weak against its competitors. Current market pricing indicates a 63% probability of a 25 basis point rate reduction by the Federal Reserve, a rise from 55% just a week prior. This dovish outlook plays a significant role in enhancing gold ’s appeal, given it doesn’t yield interest.
Geopolitical tensions between Russia and Ukraine have further contributed to gold ’s safe-haven appeal. Reports have surfaced indicating threats from Russia concerning attacks on important decision-making infrastructure in Kyiv, following retaliatory strikes against Ukraine’s energy grid. Such developments in international relations often lead investors to seek refuge in gold .
Looking ahead, the potential for gold prices to maintain their recovery is uncertain, particularly amid the thin trading environment expected during the Thanksgiving long weekend in the US. Should the dollar continue its downward trend, particularly against currencies like the Japanese Yen — which has strengthened following unexpectedly high inflation figures — gold might see further gains.
On the technical front, gold buyers are attempting to regain control as indicated by the relative strength index showing signs of recovery. However, the ongoing bearish momentum could limit any bullish advancements. Maintaining a close above the 50-day simple moving average at $2,670 is crucial; otherwise, sellers may push prices back towards prior support levels of $2,621 and $2,605, with a further drop to $2,573 remaining a possibility if bearish pressure intensifies. Conversely, a breakthrough over $2,670 could pave the way for gains towards $2,700 and potentially challenge the recent high of $2,721.
