November 20, 2024
New Delhi, India
Gold Price Analysis
Gold price (XAU/USD) retreated from the $2,642 level, its highest point in over a week, during Wednesday’s European session. The precious metal slid to a fresh daily low as the US Dollar (USD) regained strength amid rebounding Treasury bond yields.
Key Market Drivers
- US Dollar Strength:
- The USD found support from rising bond yields as traders bet on reduced chances of aggressive Fed rate cuts.
- According to the CME Group’s FedWatch Tool, there is a less than 60% probability of a 25-basis-point rate cut in December.
- Geopolitical Risks:
- Ongoing tensions between Russia and Ukraine supported safe-haven demand, capping deeper losses for gold.
- Market Sentiment:
- Positive risk tone reduced demand for non-yielding assets like gold, snapping a two-day winning streak.
Insights from Fed Officials
- Kansas Fed President Jeffrey Schmid suggested large fiscal deficits may not trigger inflation due to central bank interventions, hinting at potential interest rate hikes.
- Multiple FOMC member speeches are scheduled, likely influencing market sentiment on the Fed’s rate path.
Outlook
Gold prices remain under pressure due to:
- Strengthening USD and bond yields.
- A hawkish Fed stance reducing the likelihood of significant rate cuts.
However, geopolitical tensions and uncertainty surrounding fiscal policies from the incoming Trump administration may provide support to the yellow metal.
Gold prices XAUUSD was trading at 2,621.685USD down 11.180 or −0.42% at 3:30 PM IST
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