Gold Climbs Above $2,650 as Geopolitical Tensions Escalate
Gold extended its recent gains to above $2,650 per ounce on Thursday, rising for the fourth consecutive session, as investors sought safety in the metal as geopolitical uncertainty intensified with escalating Russia-Ukraine tensions. On Wednesday, Ukraine launched Western-supplied long-range weapons for the second time, a day after President Putin approved an updated nuclear doctrine expanding the conditions for using nuclear weapons. At the same time, the US vetoed a UN resolution for a Gaza ceasefire, reigniting concerns over the ongoing Middle East conflict. On the monetary policy front, markets continued to assess the Federal Reserve’s interest rate outlook, closely watching Fedspeak for new trading signals. A slight majority of the market still expects a 25bps rate cut in December, which would reduce the opportunity cost of holding non-interest-bearing gold.
In the XAU/USD, the first resistance level is 2665 followed by 2692 and 2712 respectively. On the downside the first support level is 2630 and next support levels to watch are 2590 and 2550 consecutively.
Gold Shines, Dollar Surges with Global Tensions (11.22.2024)
Markets react to geopolitical tensions, inflation data, and monetary policy shifts.
Friday saw the dollar hold strong above 107 on rate hike expectations, while gold hit $2,680, marking its fifth straight gain. Silver rebounded to $31, supported by geopolitical tensions and steady Chinese policy. In forex, GBP/USD slid on rising UK inflation, and USD/JPY traded near 154.85 after weak Japanese manufacturing data.
The British pound is trading around 1.2570 as of this morning, nearing the six-month low it reached last week amid escalating tensions between Russia and Ukraine. Reports indicate that Ukraine has launched UK-supplied cruise missiles into Russia for the first time. Earlier in the week, the pound briefly touched $1.271 after a stronger-than-expected inflation reading, which reaffirmed the Bank of England’s cautious stance on future interest rate cuts.
In October, the UK’s annual inflation rate rose to 2.3%, the highest in six months, up from 1.7% in September. This exceeded both the Bank of England’s target and the market’s forecast of 2.2%. Inflation in services, a key indicator of domestic price pressures closely monitored by the central bank, edged up slightly to 5% from 4.9%. As a result, markets are now pricing in only a 14% chance of a rate cut this year, with expectations for just two cuts in 2025.
The first resistance level for the pair is at 1.2620, followed by 1.2680 and 1.2720, respectively. On the downside, the first support level is at 1.2550, with subsequent levels to watch at 1.2520 and 1.2475.
Silver prices are trading around $31 per ounce on Friday morning, rebounding from losses in the previous session. On Wednesday, Ukraine launched a series of UK-made missiles into Russia, following an earlier strike using US-made missiles. Meanwhile, geopolitical tensions intensified as the US blocked a UN Security Council resolution calling for a ceasefire in Gaza.
Regarding monetary policy, Federal Reserve governors Michelle Bowman and Lisa Cook offered differing views on inflation and the future trajectory of interest rates in separate statements on Wednesday. In China, the People’s Bank of China (PBOC) kept key lending rates steady this week, aligning with expectations and providing no new signals likely to affect demand in the world’s largest metals consumer.
For XAG/USD, the first resistance level is at 31.60, followed by 32.50 and 32.80, respectively. On the downside, the first support level is at 30.80, with additional levels to watch at 30.20 and 29.80.
Markets Eye Fed Uncertainty Before US Data (11.25.2024)
The dollar starts the week weakening against all major currencies.
Global markets are shaped by concerns over escalating tensions between Russia and Ukraine and uncertainties surrounding the US Federal Reserve’s (Fed) monetary policy. Meanwhile, attention is turning to the US growth data set to be released next week.
Adding to the ongoing political tensions, potential conflicts between newly elected US President Donald Trump and the Fed’s leadership are contributing to market volatility. Signals from the minutes of the Federal Open Market Committee (FOMC) meeting held on November 6-7, scheduled for release on Tuesday, are expected to provide insights into the Fed’s future projections.
The EUR/USD pair started the week on a positive note, testing the 1.0500 resistance level. The dollar index fell 0.6% on Monday, dipping below 107 and retreating from its recent two-year highs after President-elect Donald Trump selected hedge fund manager Scott Bessent as Treasury Secretary. This announcement reassured investors, as Bessent is expected to focus on economic and market stability despite his support for Trump’s tariff and tax cut plans.
The dollar weakened against all major currencies, with the euro, British pound, Australian dollar, and Japanese yen posting significant gains. Market attention now shifts to the release of the latest FOMC meeting minutes, PCE inflation data, and other key economic indicators, which could shape expectations for future Fed rate decisions. Last week, the dollar surged to a two-year high amid speculation that Trump’s policies could drive inflation, potentially limiting the Fed’s ability to lower interest rates.
Support levels for EUR/USD are at 1.0450, with further levels at 1.0400 and 1.0360. On the upside, resistance is at 1.0520, followed by 1.0610 and 1.0640.
The GBP/USD pair opened the week with a bullish gap, rebounding from a three-day decline that had pushed it below 1.2500 to its lowest level since May. During the Asian trading session, the pair climbed to 1.2600, bolstered by a weaker US Dollar (USD).
The US Dollar Index (DXY), which measures the USD against a basket of major currencies, retreated from a two-year high as traders took profits amid a sharp decline in US Treasury bond yields. Additionally, a global risk-on rally in equity markets further weighed on the safe-haven dollar, providing additional upward momentum for the GBP/USD pair.
In the GBP/USD pair, the first resistance level is at 1.2620, followed by 1.2680 and 1.2720. On the downside, the first support level is at 1.2550, with subsequent supports at 1.2520 and 1.2475.
