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Gold prices have surged for the fourth consecutive day, surpassing the 50-day Simple Moving Average (SMA) of $2,660 due to global unrest and reports of Russia’s potential Inter-Continental Ballistic Missile (ICBM) launch. The US economic data suggests a strong jobs market, with the XAU/USD trading at $2,672 at weekly highs, gaining over 0.80%.
Fears that Russia launched an ICBM on Ukraine heightened tensions in Eastern Europe, but according to Reuters, they did not use an ICBM on Thursday. As a result, the gold metal rose above the 50-day SMA, which is at $2,660, amid firm US Treasury yields and a bid US Dollar.
US Initial Jobless Claims last week indicated that the labor market remains strong, suggesting the Federal Reserve could achieve a soft landing. However, other data was not encouraging, with the Philadelphia Fed Manufacturing Index dropping to -5.5 in November, below October’s 10.3 reading.
Fed speakers, including New York Fed’s John Williams and Chicago Fed Chairman Austan Goolsbee, have crossed the wires, supporting lower interest rates but opening the door to slowing the pace of easing policy. Traders have trimmed the chances for a 25 basis points rate cut at the December meeting, with the CME FedWatch Tool seeing a 56% probability of lowering rates.
Gold prices recovered even though US real yields climbed two basis points to 2.084%. US Treasury bond yields are rising, and the US Dollar Index (DXY) gains over 0.34%, up at 107.00 near weekly highs. US Initial Jobless Claims fell to 213K for the week ending November 16, and US Existing Home Sales rose to 3.96 million, reflecting a 3.4% growth rate.
The technical outlook for gold prices is set to continue, with the non-yielding metal set to trade within the $2,660-$2,700 range. If the non-yielding metal drops below the 50-day SMA at $2,658, it will face bears targeting the November 14 swing low of $2,536, followed by XAU/USD diving to $2,500.Gold prices have rallied for the fourth consecutive day, surpassing the 50-day Simple Moving Average (SMA) of $2,660. This surge is primarily driven by heightened geopolitical tensions, particularly due to the escalating Russia-Ukraine conflict and fears of a potential Russian ICBM launch.
Key Factors Driving Gold Prices Higher:
Geopolitical Tensions: The ongoing Russia-Ukraine war and the threat of a potential ICBM launch have increased demand for safe-haven assets like gold.
Strong US Job Market: Despite a mixed economic outlook, the strong US job market has led to expectations of a slower pace of Fed rate cuts, which could support gold prices.
Weakening US Dollar: A weaker US dollar, as measured by the US Dollar Index (DXY), can make gold more affordable for foreign buyers, boosting demand.
Technically, the bullish momentum in gold prices is likely to continue, with the metal potentially trading within the $2,660-$2,700 range. A break above the $2,700 level could lead to further gains, potentially targeting the November 7 high of $2,710 and the psychological $2,750 level. However, a decline below the 50-day SMA could trigger a sell-off, with potential support levels at $2,600 and the 100-day SMA at $2,550.
Gold prices are on the rise due to a combination of factors, including geopolitical tensions, a strong US job market, and a weaker US dollar. Investors seeking a safe-haven asset may find gold an attractive option in the current market environment.
