- 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
The gold price (XAU/USD) is currently trading near a four-week high that was reached the previous day, and it is expected to maintain its positive trend as the European session on Friday commences. For the fourth day in a row, the demand for the safe-haven commodity is significantly impacted by concerns regarding US President-elect Donald Trump’s trade tariffs and geopolitical risks.
In addition, the precious metal’s status as a hedge against rising prices is further bolstered by the anticipation that Trump’s expansionary policies will increase inflation.
At the same time, the Federal Reserve’s (Fed) hawkish signal that it would reduce the rate cuts in 2025 remains supportive of elevated US Treasury bond yields and aids the US Dollar (USD) in obtaining some follow-through traction. This, in turn, could prevent traders from placing aggressive bullish wagers around the non-yielding Gold price and restrict further gains. Investors may also choose to remain inactive and await the publication of the closely monitored US Nonfarm Payrolls (NFP) report before making any new directional bets.
The gold price continues to draw haven flows in anticipation of the critical US NFP report.
CNN reported on Wednesday that US President-elect Donald Trump is contemplating the declaration of a national economic emergency in order to establish legal justification for universal tariffs on both allies and adversaries..
On August 6, Ukrainian forces initiated a new surprise offensive in Kursk, Russia. They were alleged to have advanced in three waves, employing company-sized assaults and armoured vehicles.
The commander of Hamas’ Sabra battalion in Gaza City, his deputy, and two elite Nukhba company commanders were all slain in a series of airstrikes last week, according to the Israel Defense Forces.
In December, the Federal Reserve shifted to a more hawkish posture and foresaw only two quarter-point interest rate cuts in 2025, despite the fact that inflation in the world’s largest economy remains high.
Susan Collins, the President of the Boston Fed, stated on Thursday that the economy is currently on a gradual, uneven trajectory toward the 2% inflation objective. She also indicated that the current outlook necessitates a patient approach to rate cuts.
Philadelphia Fed President Patrick Harker stated that the central bank is anticipated to further reduce rates; however, he clarified that the trajectory will be contingent upon data and that it is taking a longer time to return inflation to 2%.
Jeffrey Schmid, the President of the Kansas Federal Reserve, observed that the employment market remains robust, growth is gaining momentum, and inflation is approaching the target. Any additional rate reductions should be gradual and informed by data.
Michelle Bowman, a member of the Federal Reserve Board of Governors, stated that the current policy posture may not be as restrictive as it appears to be to others, and that inflationary risks could arise from pent-up demand that has arisen in the wake of the election.
The US Treasury bond yields are expected to remain near the multi-month high reached last week, as Trump’s policies are anticipated to further inflate the economy and necessitate the Federal Reserve to reduce the rate cuts this year.
Traders are eagerly anticipating the release of the US Nonfarm Payrolls (NFP) data, which is anticipated to indicate that the economy added 160K jobs in December and the Unemployment Rate remained at 4.2%.
The technical configuration of the gold price is favorable to bulls, and it is on course to reclaim $2,700.
This week’s breach through the $2,665 horizontal resistance was perceived as a new catalyst for bullish traders from a technical perspective. The Gold price appears to be on the brink of a further ascent to the $2,681-2,683 intermediate hurdle, and subsequently seek to reclaim the $2,700 round-figure mark, as oscillators on the daily chart have recently begun to gain positive momentum.
Conversely, declines toward the overnight swing low, which is approximately $2,655, may be perceived as a purchasing opportunity. Support is provided in the vicinity of the $2,635 region, and the weekly low, which was reached on Monday in the $2,615-2,614 range, is followed by the $2,600 confluence. The latter is composed of the 100-day Exponential Moving Average (EMA) and a short-term ascending trend line that extends from the November monthly low. If broken decisively, this line will alter the bias in favor of bearish traders.
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