- Gold price attracts some dip-buyers on Wednesday amid subdued US Dollar price action.
- The prospects for a slower Fed rate cut and elevated US bond yields might cap further gains.
- Traders might also opt to wait for the US CPI report before placing fresh directional bets.
Gold price (XAU/USD) reverses an intraday dip to the $2,669 area and turns positive for the second straight day on Wednesday, though the upside seems limited ahead of the US Consumer Price Index (CPI) report. The US Dollar (USD) hangs near the weekly low touched in reaction to the softer US Producer Price Index (PPI) on Tuesday and turns out to be a key factor lending support to the commodity.
Meanwhile, easing fears about US President-elect Donald Trump’s disruptive trade tariffs remain supportive of the risk-on mood – as depicted by a generally positive tone around the equity markets. Furthermore, growing acceptance that the Federal Reserve (Fed) will pause its rate-cutting cycle later this month keeps the US Treasury bond yields and could act as a headwind for the non-yielding Gold price.
Gold price is underpinned by softer USD; hawkish Fed expectations might cap gains ahead of US CPI report
- A Bloomberg report, citing people familiar with the matter, said on Monday that US President-elect Donald Trump’s economic advisers are considering a program to gradually increase tariffs month by month.
- Moreover, softer-than-expected inflation data from the US helped pause the recent surge in the US Treasury bond yields and boosted investors’ appetite for riskier assets, undermining the safe-haven Gold price.
- The US Bureau of Labor Statistics reported on Tuesday that the Producer Price Index, which measures wholesale inflation, rose 0.2% in December and the core gauge remained flat during the reported month.
- This comes on the back of the upbeat US monthly jobs report on Friday and makes it difficult for investors to project the Federal Reserve’s next moves on interest rates, which keeps the US Dollar bulls on the defensive.
- Ukraine launched its largest air attacks on Russia since the start of the war nearly three years ago. The Russian military said that the attacks would not go unanswered and launched more projectiles towards Ukraine.
- Israel launched fierce strikes on Gaza and intensified bombing on Tuesday, killing at least 13 people. Meanwhile, negotiators are nearing a breakthrough on the Gaza ceasefire after intense discussions in Qatar.
- Traders now look forward to the US Consumer Price Index (CPI) report for more insight into the Fed’s policy outlook, which will drive the USD demand and provide some meaningful impetus to the XAU/USD.
Gold price needs to surpass the $2,690 immediate hurdle to support prospects for additional gains
Technical indicators on the daily chart have been gaining positive traction and support prospects for the emergence of some dip-buyers near the $2,663-2,662 area. Some follow-through selling, however, could drag the Gold price to the next relevant support near the $2,336-$2,635 region. The downward trajectory could extend further towards the $2,615-2,614 confluence, comprising the 100-day Exponential Moving Average (SMA) and a multi-week-old ascending trend line. A convincing break below the latter would shift the near-term bias in favor of bearish traders and pave the way for deeper losses.
On the flip side, the $2,690 zone is likely to act as an immediate hurdle ahead of the $2,700 mark. Some follow-through buying will set the stage for an extension of over a three-week-old up-trend and lift the Gold price to the $2,716-2,717 hurdle en route to the December monthly swing high, around the $2,726 region.
US Dollar PRICE This week
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.47% | 0.14% | -0.36% | -0.46% | -0.74% | -0.74% | -0.50% | |
| EUR | 0.47% | 0.60% | 0.18% | 0.08% | -0.12% | -0.20% | 0.06% | |
| GBP | -0.14% | -0.60% | -0.48% | -0.53% | -0.72% | -0.80% | -0.53% | |
| JPY | 0.36% | -0.18% | 0.48% | -0.09% | -0.44% | -0.51% | -0.12% | |
| CAD | 0.46% | -0.08% | 0.53% | 0.09% | -0.32% | -0.29% | 0.04% | |
| AUD | 0.74% | 0.12% | 0.72% | 0.44% | 0.32% | -0.12% | 0.19% | |
| NZD | 0.74% | 0.20% | 0.80% | 0.51% | 0.29% | 0.12% | 0.27% | |
| CHF | 0.50% | -0.06% | 0.53% | 0.12% | -0.04% | -0.19% | -0.27% |
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. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
