- Gold price attracts buyers for the fourth straight day on Friday amid some haven flows.
- The Fed’s hawkish stance, elevated US bond yields and a bullish USD should cap gains.
- Traders might also opt to wait for the release of the key US NFP report later this Friday.
Gold price (XAU/USD) sticks to its positive bias heading into the European session on Friday and currently trades near a four-week high touched the previous day. Concerns about US President-elect Donald Trump’s trade tariffs, along with geopolitical risks, turn out to be key factors undermining demand for the safe-haven commodity for the fourth successive day. Apart from this, expectations that Trump’s expansionary policies will boost inflation further benefit the precious metal’s status as a hedge against rising prices.
Meanwhile, the Federal Reserve’s (Fed) hawkish signal that it would slow the pace of rate cuts in 2025 remains supportive of elevated US Treasury bond yields and assists the US Dollar (USD) in gaining some follow-through traction. This, in turn, might hold back traders from placing aggressive bullish bets around the non-yielding Gold price and cap further gains. Investors might also opt to move to the sidelines and wait for the release of the closely-watched US Nonfarm Payrolls (NFP) report before placing fresh directional bets.
Gold price continues to attract haven flows ahead of the crucial US NFP report
- CNN reported on Wednesday that US President-elect Donald Trump is considering declaring a national economic emergency to provide legal justification for universal tariffs on allies and adversaries.
- Ukrainian forces launched a new surprise offensive in Kursk, inside Russia on August 6 and were reported to have advanced in three waves using company-sized assaults backed by armoured vehicles.
- The Israel Defense Forces stated that the commander of Hamas’ Sabra battalion in Gaza City, his deputy and two elite Nukhba company commanders were killed in a series of airstrikes last week.
- The Federal Reserve adopted a more hawkish stance in December and projected only two quarter-point interest rate cuts in 2025 amid still elevated inflation in the world’s largest economy.
- Boston Fed President Susan Collins said on Thursday that the economy is on a gradual, uneven trajectory to the 2% inflation target and the current outlook calls for a patient approach to rate cuts.
- Philadelphia Fed President Patrick Harker noted that the central bank is expected to cut rates further but explained that the path will depend on data and that it is taking longer to get inflation back to 2%.
- Kansas Fed President Jeffrey Schmid noted that inflation is moving toward target, growth is showing momentum, and the jobs market is still healthy. Any further rate cuts should be gradual and data-driven.
- Fed Board of Governors member Michelle Bowman said that the current stance of policy may not be as restrictive as others may see it and pent-up demand following the election could pose inflationary risks.
- Trump’s policies are expected to stoke further inflation and further force the Fed to slow the pace of rate cuts this year, which keeps the US Treasury bond yields close to a multi-month high touched last week.
- Traders now look forward to the release of the US Nonfarm Payrolls (NFP) report, which is expected to show that the economy added 160K jobs in December and the Unemployment Rate held steady at 4.2%.
Gold price technical setup favors bulls, remains on track to reclaim $2,700
From a technical perspective, this week’s breakout through the $2,665 horizontal resistance was seen as a fresh trigger for bullish traders. Given that oscillators on the daily chart have just started gaining positive traction, the Gold price seems poised to climb further to the $2,681-2,683 intermediate hurdle and then aim to reclaim the $2,700 round-figure mark.
On the flip side, dips towards the overnight swing low, around the $2,655 area, could be seen as a buying opportunity. This is followed by support near the $2,635 region and the weekly low, around the $2,615-2,614 zone touched on Monday, and the $2,600 confluence. The latter comprises the 100-day Exponential Moving Average (EMA) and a short-term ascending trend line extending from the November monthly low, which if broken decisively will shift the bias in favor of bearish traders.
