Gold (XAU/USD) is holding firm during Wednesday’s North American session, though it has pared earlier gains of over 1%. This retreat comes as the US Dollar (USD) rallies sharply, with traders awaiting a crucial US jobs report on Thursday and evaluating developments in the Russia-Ukraine conflict. At the time of writing, XAU/USD is trading at $4,081, up 0.31%.
The precious metal’s gains are being offset by a stronger Greenback and rumors of a new Ukraine peace plan, despite underlying safe-haven demand, all ahead of key US economic data. Market sentiment saw a modest improvement as US equities recovered some ground after consecutive bearish sessions driven by concerns over a potential AI bubble, which was previously a tailwind for bullion.
Gold initially recovered but has since retreated as the Greenback posted solid gains, even as US Treasury bond yields fell across the curve. Investors are bracing for the Federal Reserve’s (Fed) latest meeting minutes and Thursday’s Nonfarm Payrolls (NFP) report. The US Bureau of Labor Statistics (BLS) announced that the October and November NFP reports will be published on December 16, after the Fed’s final meeting, and that the unemployment rate could not be collected.
Money markets had priced in a 42% chance of a Fed rate cut at the December 9-10 meeting. However, Fed Chair Jerome Powell warned at the last meeting that a December rate cut is far from certain, highlighting “strongly different views” within the Federal Open Market Committee (FOMC).
According to the Financial Times, rumors that US and Russian officials have drafted a new peace plan for Ukraine contributed to lower Gold prices.
Daily Market Movers: Fed Minutes and US NFP to Dictate Gold’s Direction
The US Dollar Index (DXY), which tracks the Dollar against six major currencies, has surged to a two-week high, up 0.54% at 100.13. Conversely, US Treasury yields remain steady, with the 10-year yield at 4.11%. US real yields, which have an inverse correlation with Gold prices, are also unchanged at 1.85%.
The US Nonfarm Payrolls figures for September are due on Thursday. Economists anticipate the economy added 50,000 jobs, an increase from August’s 22,000 print. On Tuesday, the US Department of Labor reported that Initial Jobless Claims for the week ending October 18 were 232,000, while continuing claims rose to 1.957 million, the highest since early August.
US Treasury Secretary Scott Bessent stated that US President Donald Trump will announce his pick for the next Federal Reserve Chair in December.
Goldman Sachs revealed that central banks, particularly the People’s Bank of China (PBoC), continue to purchase gold. The PBoC reportedly added an estimated 15 tons of gold to its Forex reserves two months ago and may continue purchases in November, which could drive bullion prices higher.
Technical Outlook: Gold Consolidates, Subdued Between $4,070-$4,100
Gold’s uptrend remains intact, but price action suggests buyer caution as they await the Fed minutes. XAU/USD is currently above its 20-day Simple Moving Average (SMA) at $4,044, a key support level. Momentum remains bullish, as indicated by the Relative Strength Index (RSI).
If Gold surpasses $4,100, traders could target the $4,200 mark. However, a drop below the 20-day SMA would leave it vulnerable to a retracement towards $4,000, followed by the October 28 low near $3,886.
Here’s an image that illustrates gold prices paring gains, showing the influences of a strong dollar and peace rumors, alongside safe-haven demand.
