- Gold price is building on the previous upsurge, testing an eight-day high near $1,990.
- Increased bets of Fed pause keep US Treasury bond yields undermined, Gold price buoyed.
- Upside risks remain intact for Gold price but US Dollar strength could act as a headwind.
Gold price is consolidating the weekly gains above $1,980 early Friday, set to snap a two-week losing streak. Falling US Treasury bond yields aid the Gold price uptrend, but the resurgent United States Dollar (USD) could check the bright metal’s bullish momentum.
Gold price remains at the mercy of risk trends, Fedspeak
Cautious optimism prevails, as Asian stock markets ended mixed while the European markets are likely to see a positive open. Resurfacing US-China trade worries and uncertainty around the US Federal Reserve’s (Fed) interest rate outlook are keeping investors on the edge. China’s Commerce Minister expressed concern over US curbs on semiconductor exports to China, as well as sanctions on Chinese firms and tariffs on Chinese imports during his meeting with the USCommerce Secretary Gina Raimondo on Thursday.
Amidst jittery markets, the safe-haven US Dollar is finding a floor, limiting the upside attempts in Gold price. However, Gold price continues to cheer the recent sell-off in the US Treasury bond yields, as the demand for the US government bonds increased on hopes that the US Fed is done with its hiking cycle, with markets pricing in interest rate cuts by May next year.
The latest run of soft US economic data releases cemented Fed pause expectations, justifying the upsurge in the non-interest-bearing Gold price. Earlier this week, the US Producer Price Index (PPI) fell the most in three-and-a-half years in October after the US Consumer Price Index (CPI) inflation fell to 3.2% YoY in October. Further, Retail sales, which are adjusted for seasonality but not inflation, fell 0.1% in October from the prior month. On Thursday, the US Initial claims rose 13,000 to a seasonally adjusted 231,000 for the week ended Nov. 11.
Against this backdrop, Gold price is likely to maintain its uptrend but the end-of-the-week profit-taking could emerge as a headwind alongside a potential extension in the US Dollar recovery. Meanwhile, the US Housing Starts and Building Permits data are unlikely to have a significant impact on the US Dollar trades.
Gold price technical analysis: Daily chart
Gold price stormed through the 21-day Simple Moving Average (SMA) at $1,974 and managed to close Thursday above the latter, boosting the buyers’ motivation.
The 14-day Relative Strength Index (RSI) holds comfortably above the midline, supporting the bullish bias.
The next upside barrier is seen at the descending trendline resistance of $1992, close to the November 6 high of $1,993. Acceptance above the latter will prompt Gold buyers to challenge the $2,000 mark.
Further up, the static resistance around $1,905-$1,910 will be put to the test.
Conversely, if Gold sellers barge in, the initial support is aligned at the 21-day SMA at $1,974, below a sharp drop toward 1,960 cannot be ruled out.
Gold price is likely to test the $1,950 psychological support on an extension of the downside.