Gold price in India: Rates on December 17
- Gold price attracts some haven flows amid the looming risk of a US government shutdown.
- The Fed’s hawkish stance acts as a tailwind for the USD and might cap the precious metal.
- Traders might also refrain from placing bullish bets ahead of the US PCE Price Index data.
Gold price (XAU/USD) sticks to its positive bias during the early European session on Friday and currently trades just above the $2,600 mark, though any meaningful appreciating move still seems elusive. Against the backdrop of persistent geopolitical risks, trade war fears and the Federal Reserve’s (Fed) hawkish shift, the threat of a partial US government shutdown offers support to the safe-haven precious metal.
Meanwhile, the Federal Reserve’s (Fed) hawkish signal that it would slow the pace of rate cuts in 2025 remains supportive of elevated US Treasury bond yields and assists the US Dollar (USD) in preserving its weekly gains to a two-year top. This could cap any further gains for the non-yielding Gold price as traders now look to the US Personal Consumption Expenditure (PCE) Price Index for a fresh impetus.
Gold price benefits from the global flight to safety; lacks bullish conviction
- The US House of Representatives on Thursday failed to pass A spending bill to fund the government, raising the risk of a government shutdown at the end of the day on Friday.
- This comes on top of persistent geopolitical risks and concerns about US President-elect Donald Trump’s tariff plans, which, in turn, drive some haven flows towards the Gold price.
- The US Treasury bond yields retreat from a multi-month top, capping the post-FOMC blowout US Dollar rally to a two-year top and lending additional support to the commodity.
- The US Bureau of Economic Analysis reported on Thursday that the economy expanded at a 3.1% annualized pace in the third quarter compared to 2.8% estimated previously.
- Other data on Thursday showed that the number of Americans filing new applications for jobless benefits fell more than expected, to 220K for the week ended December 14.
- This reaffirms the Federal Reserve’s hawkish outlook for a slower rate cut path in 2025, which should act as a tailwind for the US bond yields and cap the non-yielding yellow metal.
- Bulls might also refrain from placing aggressive bets ahead of Friday’s release of the US Personal Consumption Expenditure (PCE) Price Index – the Fed’s preferred inflation gauge.
Gold price seems vulnerable while below 100-day SMA support breakpoint
From a technical perspective, the post-FOMC slump below the 100-day Simple Moving Average (SMA) was seen as a fresh trigger for bearish traders. Moreover, oscillators on the daily chart have been gaining negative traction and suggest that the path of least resistance for the Gold price is to the upside. Hence, any subsequent move up might continue to face immediate resistance near the overnight swing high, around the $2,626 region. Some follow-through buying, however, might trigger a short-covering rally and lift the XAU/USD to the next relevant hurdle near the $2,652-2,655 supply zone. A sustained strength beyond the latter could negate the negative bias and pave the way for additional gains.
On the flip side, the monthly low, around the $2,583 region touched on Thursday, could protect the immediate downside, below which the Gold price could drop to the $2,560 area en route to the $2,537-2,536 zone or the November swing low. The downward trajectory could extend further towards the $2,500 psychological mark before the XAU/USD eventually drops to the very important 200-day SMA support, currently pegged near the $2,472 region.
