Gold Bullish Bias Dominates – Quick Daily Outlook
Gold is trading with a slight bullish bias at $1,787. Traders are waiting to hear what the Federal Reserve says about interest rates next
Gold is trading with a slight bullish bias at $1,787. Traders are waiting to hear what the Federal Reserve says about interest rates next week. In the meantime, the price of gold has set up a base at a technical level of support. In this regard, the US dollar fell against key currencies midweek amid fears that rising interest rates might send the US economy into a slump.
Traders are flocking to safe-haven assets as recessionary fears mount, helping to bolster sentiment in the gold market. The yield on 30-year US Treasuries fell more than 10 basis points to a three-month low, while yields on 10-year US Treasuries fell as well. The US Dollar, as measured by the DXY index, which compares the greenback to a basket of currencies, fell to a low of 104.87 on Wednesday before stabilizing and advancing into the 105s on Thursday, impacting gold prices.
Overall, GOLD price investors are looking for direction as we anticipate Friday’s November Producer Price Index (PPI) data, which follows Monday’s positive surprise in the ISM Services PMI. The US Dollar has been unable to consolidate any gains in anticipation of the data, and the absence of Federal Reserve speakers has left the Gold market devoid of a strong impetus. Even news of additional China openness steps has had little impact on the gold price, US dollar, or equities.
World Interest Rate Probabilities (WIRP) indicate that a Federal Reserve 50 basis point interest rate hike at the Federal Open Market Committee (FOMC) meeting on December 14 is completely priced in. While swaps markets are pricing in a peak policy rate of 5.0%, there is less than a 10% chance of a greater 75 bp rise, which has weighed on the US Dollar.
According to Brown Brothers analysts, the WIRP predicts a 50 basis point rise on February 1 and a final 25 basis point Federal Reserve interest rate hike in the second quarter (Q2). Analysts said they “don’t think this tightening route will get inflation back to target, not when the labor market remains solid, and consumption is holding up.” This is where we believe the pricing error is. If and when markets reprice, the dollar should benefit.”
Gold Technical Outlook
Gold price provided clear positive trades to attempt to return to the chart’s bullish channel, waiting for positive momentum to assist in pushing the price to surpass $1,790 and ease the mission of heading towards $1,810 as the next positive station, noting that breaching this level will extend the bullish wave to reach $1,850 areas. As a result, we will continue to recommend the bullish trend until $1,764.40 is broken and held below.
Today’s trading range is likely between $1,770 support and $1,810 resistance.
Today’s projected trend: bullish
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