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Gold price attracts some haven flows on Thursday in the wake of a softer tone around the equity markets. The US Dollar builds on the overnight bounce from a two-month low and should cap gains for XAU/USD. Bets that the Federal Reserve will not hike interest rates further could act as a headwind for the Greenback.
Gold price (XAU/USD) catches fresh bids on Thursday and for now, seems to have stalled its retracement slide from over a one-week high, around the $1,975-1.976 area touched the previous day. A softer tone around the US equity futures turns out to be a key factor acting as a tailwind for the safe-haven precious metal heading into the European session.
Apart from this, growing acceptance that the Federal Reserve (Fed) is done hiking interest rates offers additional support to the non-yielding yellow metal.
The US Retail Sales fell less than expected in October, which, along with an upward revision of the previous month’s already stronger reading, led to a goodish rebound in the US Treasury bond yields. This continues to lend some support to the Greenback and warrants caution before placing bullish bets around the XAU/USD.
Daily Digest Market Movers: Gold price continues to draw some support from the cautious market mood
The US Producer Price Index (PPI) registered its largest decline since April 2020 and fell 0.5% in October. Moreover, data for September was also revised down to show the PPI increasing by 0.4% instead of 0.5%. This comes on top of the US CPI report on Tuesday, which showed that consumer inflation was cooling faster than anticipated, and strengthened expectations that the Federal Reserve is done hiking interest rates.
Market participants now look forward to the US economic docket, featuring the release of Weekly Initial Jobless Claims, the Philly Fed Manufacturing Index and Industrial Production figures for a fresh impetus.
Technical Analysis: Gold price might struggle to capitalize on its modest intraday positive move
From a technical perspective, the one-week high, around the $1,975-1,976 area touched on Wednesday now seems to act as an immediate hurdle. A sustained strength beyond has the potential to lift the Gold price further towards the $1,991-1,992 hurdle en route to the $2,000 psychological mark.
On the flip side, the $1,955-1,950 area is likely to protect the immediate downside ahead of the 200-day Simple Moving Average (SMA), currently near the $1,935 region. This is closely followed by the 100- and the 50-day SMAs confluence, around the $1,928-1,925 zone, below which the Gold price could turn vulnerable and accelerate the fall towards the $1,900 round figure.
US Dollar price today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the Japanese Yen.
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off” refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row.
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