Gold price faced selling pressure on Monday, extending Friday’s pullback from its post-NFP swing high. This decline can be attributed to the positive market sentiment and a modest recovery in US bond yields, which redirected capital away from the yellow metal. The US dollar, on the other hand, remains weak as investors speculate that the Federal Reserve will not raise rates further, providing some support for gold. Geopolitical tensions, particularly the Israel-Hamas conflict, may also prevent a significant drop in the safe-haven XAU/USD.
Starting the new week, gold price (XAU/USD) continues to weaken, extending the retracement from its multi-day high of $2,004. The rally in equity markets, signaling a risk-on sentiment, is one of the primary factors weighing on the precious metal. Additionally, the modest increase in US Treasury bond yields is dragging gold closer to the $1,980 level. The USD, meanwhile, remains near a six-week low as expectations of no further rate hikes from the Fed persist. This situation favors USD bears and should provide support for the US dollar-denominated gold price. The possibility of further tensions in the Israel-Hamas conflict also limits potential losses for XAU/USD, requiring caution when anticipating any significant corrective decline from the year-to-date peak reached on October 27.
In terms of market movers, the decline in safe-haven demand and the rebound in US bond yields put pressure on gold price. The US dollar sees a modest recovery from its six-week low, supported by the increase in US Treasury bond yields, which is negatively impacting gold price. Expectations of the Fed keeping rates unchanged, especially after the softer US macro data released on Friday, are likely to cap any substantial appreciation of the greenback. The October non-farm payrolls report revealed that the US economy added 150,000 jobs, lower than the estimated 180,000, and the previous month’s reading was revised down to 297,000 from the originally reported 336,000. The US ISM Non-Manufacturing PMI also declined to a five-month low of 51.8 in October from 53.6 the previous month, reinforcing expectations for the Fed to maintain the status quo at the December policy meeting.
On the geopolitical front, Israel rejected calls for a ceasefire in Gaza and announced plans to intensify operations against Hamas. Israel’s chief military spokesperson reported attacks on Hezbollah targets in southern Lebanon in response to a missile attack that killed an Israeli citizen. Hezbollah retaliated by firing rockets at northern Israel, stating that it would never tolerate attacks on civilians and vowing a strong response. Hezbollah’s leader, Hassan Nasrallah, claimed the group was not afraid of US warships and left open the possibility of expanding the conflict into Lebanon.
From a technical perspective, it is important for gold price to surpass the $2,000 mark in order for bulls to regain control. Any further decline below the $1,980 level will find support near last week’s swing low around $1,970. Continued selling pressure could push gold towards the $1,964 area and potentially down to the $1,954-1,953 support zone. On the upside, breaking through the $2,000 barrier will encounter resistance at Friday’s swing high of $2,004 and the year-to-date peak of $2,009. Sustained strength beyond this level could propel gold price towards the $2,022 resistance zone.
Lastly, the table and heat map show the percentage changes of the US dollar against major currencies on the current day. This provides a snapshot of how the US dollar is performing against different currencies, with the New Zealand dollar being the weakest against the US dollar according to the data presented.
