Share:
Gold price attracts buyers on Wednesday and moves away from the weekly trough.
Softer US bond yields keep the USD bulls on the defensive and lend some support.
Recession fears and geopolitical risks further seem to benefit the safe-haven metal.
The prospects for further policy tightening by the Fed cap gains for the XAU/USD.
Gold price (XAU/USD) attracts some buyers on Wednesday and move away from the weekly low, around the $1,954-1,953 area touched the previous day. The precious metal trades with a mild positive bias above the $1,970 level heading into the European session and for now, seems to have stalled its recent retracement slide from the vicinity of the $2,000 psychological mark, or a five-month top touched last Friday.
Softer US Treasury bond yields fail to assist the US Dollar (USD) to capitalize on the overnight solid bounce from a one-month, which, in turn, is seen benefitting the non-yielding yellow metal. Apart from this, looming recession risk, fueled by a flurry of weaker economic data from Europe on Tuesday, along with the Middle East conflict, turns out to be another factor lending some support to the safe-haven XAU/USD. The precious metal had rallied over 8% in the past two weeks on the back of concerns that the Israel-Hamas war could spill over to other Middle Eastern nations and impact the world economy.
That said, the prospects for further policy tightening by the Federal Reserve (Fed) hold back bulls from placing aggressive bets and cap the upside for the Gold price. Traders also seem reluctant and prefer to wait for Fed Chair Jerome Powell’s speech later during the US session. The focus, meanwhile, remains on the US Core PCE Price Index on Friday, which could provide some meaningful impetus to the commodity.
Gold price attracts some buyers in the wake of retreating US Treasury bond yields, which keeps the US Dollar (USD) bulls on the defensive, and geopolitical risks.
World leaders pushed for either a pause or ceasefire between Israel and Hamas so that humanitarian aid could be delivered to the besieged Gaza Strip.
The benchmark 10-year US Treasury yield moves further away from a 16-year peak after crossing the symbolic 5% threshold level for the first time since 2007.
Business activity in the Euro Zone took a surprise turn for the worse and revived recession fears, which further benefits the safe-haven XAU/USD.
The US manufacturing sector pulled out of a five-month contraction and services activity accelerated modestly, pointing to a still resilient economy.
The Fed is expected to maintain the status quo in November, though the markets are pricing in the possibility of one more 25 basis point lift-off by the year-end.
Investors now look to Fed Chair Jerome Powell’s speech for cues about the future rate-hike path, which, in turn, should provide a fresh impetus to the metal.
The focus will also be on the Advance US Q3 GDP report and the European Central Bank (ECB) rate decision on Thursday, followed by the US PCE price index on Friday.
From a technical perspective, any subsequent move up is likely to confront some resistance near the weekly high, around the $1,982-1,983 region. Some follow-through buying should allow the Gold price to make a fresh attempt to conquer the $2,000 psychological mark. The subsequent move up has the potential to lift the XAU/USD further towards the next relevant hurdle near the $2,022 area.
On the flip side, the $1,964 level now seems to protect the immediate downside ahead of the weekly low, around the $1,953-1,952 zone touched on Tuesday. The latter represents a strong horizontal resistance breakpoint and should act as a pivotal point, below which the Gold price could slide back to the 200-day Simple Moving Average (SMA), currently pegged near the $1,932-1,931 region.
US Dollar price today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Canadian Dollar.
USD
EUR
GBP
CAD
AUD
JPY
NZD
CHF
USD
-0.09%
-0.09%
0.00%
-0.35%
-0.01%
-0.05%
-0.03%
EUR
0.08%
-0.01%
0.08%
-0.25%
0.07%
0.03%
0.06%
GBP
0.10%
0.00%
0.09%
-0.25%
0.08%
0.03%
0.07%
CAD
-0.01%
-0.10%
-0.10%
-0.34%
-0.02%
-0.07%
-0.04%
AUD
0.35%
0.25%
0.27%
0.36%
0.33%
0.29%
0.33%
JPY
0.01%
-0.07%
-0.09%
-0.01%
-0.33%
-0.04%
-0.01%
NZD
0.07%
-0.03%
-0.03%
0.06%
-0.28%
0.04%
0.03%
CHF
0.03%
-0.07%
-0.07%
0.03%
-0.33%
0.01%
-0.05%
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
Fed FAQs
What does the Federal Reserve do, how does it impact the US Dollar?
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates.When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money.When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
How often does the Fed hold monetary policy meetings?
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions.The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
What is Quantitative Easing (QE) and how does it impact USD?
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system.It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
What is Quantitative Tightening (QT) and how does it impact the US Dollar?
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
Share:
Feed news
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
