Gold prices (XAU/USD) faced selling pressure during Thursday’s Asian session, remaining within a narrow trading range established over the past week. A combination of rebounding U.S. Treasury yields, mixed Federal Reserve signals, and a prevailing risk-on sentiment have kept the yellow metal subdued. However, ongoing geopolitical concerns and a lack of substantial U.S. Dollar (USD) strength have provided some support.
Fed’s Cautious Stance Undermines Gold
Investors are increasingly convinced that the Federal Reserve will take a measured approach to future rate cuts. Hawkish remarks from Federal Open Market Committee (FOMC) members, including Chair Jerome Powell, have reinforced this view. Powell highlighted the robustness of the U.S. economy, signaling the Fed’s capacity to adopt a cautious approach to interest rate adjustments.
Similarly, St. Louis Fed President Alberto Musalem and San Francisco Fed President Mary Daly expressed reservations about aggressive rate cuts, citing inflation concerns and the need for sustainable growth. These statements, along with speculations that U.S. President-elect Donald Trump’s policies may drive inflation higher, have contributed to a modest rebound in U.S. bond yields.
The yield on the 10-year U.S. Treasury note recovered from its lowest closing level since October 21, pressuring the non-yielding Gold market.
Geopolitical Tensions and USD Weakness Lend Support
Despite the bearish factors, persistent geopolitical tensions, particularly the ongoing Russia-Ukraine conflict, and concerns over Trump’s potential trade tariffs have bolstered safe-haven demand for Gold. Additionally, the USD has struggled to gain traction, providing a cushion for XAU/USD.
Market participants are also exercising caution ahead of Friday’s critical U.S. Nonfarm Payrolls (NFP) report, which could significantly influence the Federal Reserve’s next policy steps.
Technical Analysis: Range-Bound Gold Awaits Breakout
Gold’s recent breach of a short-term ascending channel signaled bearish potential, but neutral oscillators on daily and 4-hour charts suggest a lack of immediate conviction. Traders are closely monitoring the $2,630 support level. A decisive drop below this mark could accelerate the downside toward $2,622-2,621 and potentially the $2,600 psychological threshold. Further declines might target the 100-day Simple Moving Average (SMA) near $2,581 and the November low around $2,537-2,536.
On the upside, resistance is expected near the $2,655 level, followed by last Friday’s high at $2,666. A break above $2,678 could set the stage for a push toward the $2,700 level, with further gains encountering strong resistance around $2,721-2,722.
Market Outlook
With traders awaiting clearer directional cues, Thursday’s U.S. Weekly Initial Jobless Claims and Friday’s NFP report are expected to provide fresh impetus for the Gold market. Until then, XAU/USD is likely to remain within its established range, shaped by a complex interplay of economic and geopolitical factors.
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