Gold prices (XAU/USD) held steady on Friday, maintaining levels in the $2,570s. This came after the metal recovered slightly from its recent two-month lows, despite the release of US Retail Sales data, which showed mixed economic signals.
Gold Prices Hold Ground Amid Mixed US Retail Sales Data
Gold remained relatively unaffected by the release of US Retail Sales figures, which indicated a monthly increase of 0.4%. Although this surpassed the forecasted 0.3%, it remained below the previous month’s revised 0.8%, as reported by the Bureau of Labor Statistics (BLS).
Retail Sales excluding Autos showed a modest 0.1% rise, below the anticipated 0.3% and the previous month’s 1.0% revision. These figures reflect robust consumer spending, a key driver of the US economy. Federal Reserve Chair Jerome Powell recently emphasized the economy’s strength, suggesting that aggressive interest rate cuts may not be necessary.
Higher interest rates typically strengthen the US Dollar (USD) but create downward pressure on Gold, as the metal becomes less appealing due to its non-interest-bearing nature.
Strong US Dollar Continues to Pressure Gold
The US Dollar Index (DXY) reached a year-to-date high on Thursday, buoyed by solid labor market data and persistent inflation. Federal Reserve Chair Powell’s remarks underscored the strength of the US economy, compounding bearish momentum for Gold.
Despite geopolitical tensions, Gold’s appeal as a safe-haven asset has been overshadowed by outflows from hedge funds and Gold ETFs. Data from the World Gold Council (WGC) revealed that Gold ETFs shed $809 million (12 tonnes) in early November, mainly due to North American outflows.
Key Drivers Behind Gold’s Decline
- Rising US Inflation: Higher-than-expected factory-gate inflation data.
- Declining Unemployment Claims: Positive labor market signals weigh on Gold.
- Republican Political Gains: With control over the legislature, the US government could maintain higher interest rates.
Furthermore, hedge fund outflows indicate caution among institutional investors, while technical indicators suggest a possible continuation of Gold’s short-term downtrend.
Technical Analysis and Future Projections
Gold prices (XAU/USD) held steady on Friday, maintaining levels in the $2,570s. This came after the metal recovered slightly from its recent two-month lows, despite the release of US Retail Sales data, which showed mixed economic signals.
Gold Prices Hold Ground Amid Mixed US Retail Sales Data
Gold remained relatively unaffected by the release of US Retail Sales figures, which indicated a monthly increase of 0.4%. While this exceeded expectations of 0.3%, it fell short of the revised 0.8% from the previous month, according to the Bureau of Labor Statistics (BLS).
Retail Sales excluding Autos showed a modest 0.1% rise, below the anticipated 0.3% and the previous month’s 1.0% revision. These figures reflect robust consumer spending, a key driver of the US economy. Federal Reserve Chair Jerome Powell recently emphasized the economy’s strength, suggesting that aggressive interest rate cuts may not be necessary.
Higher interest rates typically strengthen the US Dollar (USD) but create downward pressure on Gold, as the metal becomes less appealing due to its non-interest-bearing nature.
Strong US Dollar Continues to Pressure Gold
The US Dollar Index (DXY) reached a year-to-date high on Thursday, buoyed by solid labor market data and persistent inflation. Federal Reserve Chair Powell’s remarks underscored the strength of the US economy, compounding bearish momentum for Gold.
Despite geopolitical tensions, Gold’s appeal as a safe-haven asset has been overshadowed by outflows from hedge funds and Gold ETFs. Data from the World Gold Council (WGC) revealed that Gold ETFs shed $809 million (12 tonnes) in early November, mainly due to North American outflows.
Key Drivers Behind Gold’s Decline
- Rising US Inflation: Higher-than-expected factory-gate inflation data.
- Declining Unemployment Claims: Positive labor market signals weigh on Gold.
- Republican Political Gains: With control over the legislature, the US government could maintain higher interest rates.
Furthermore, hedge fund outflows indicate caution among institutional investors, while technical indicators suggest a possible continuation of Gold’s short-term downtrend.
Technical Analysis and Future Projections
Gold found support at its 100-day Simple Moving Average (SMA), forming a bullish Hammer candlestick pattern. However, confirmation of a reversal requires a bullish close above Friday’s levels.
If prices break below the $2,530 support, the next targets lie at $2,470 and $2,400, near the 200-day SMA. On the upside, long-term trends hint at potential for recovery aligned with broader cycles.
Conclusion
Gold prices are under pressure due to a strong US Dollar, political developments, and changing economic conditions. However, long-term trends suggest potential for recovery amid ongoing geopolitical risks.
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