- Gold price attracts some dip-buyers on Monday and stands firm near a one-month top set on Friday.
- Geopolitical risks and the risk-off impulse drive some safe-haven flows towards the precious metal.
- Hawkish Fed expectations, elevated US bond yields and bullish USD cap gains for the XAU/USD.
Gold price (XAU/USD) struggles to capitalize on its modest intraday bounce from the $2,679 region and remains below a one-month high touched on Friday through the early European session. The upbeat US Nonfarm Payrolls (NFP) report reinforced market expectations that the Federal Reserve (Fed) will pause its rate-cutting cycle later this month. This remains supportive of elevated US Treasury bond yields and keeps the US Dollar (USD) bulls in control near a two-year peak, which, in turn, acts as a headwind for the non-yielding yellow metal.
Meanwhile, hawkish Fed expectations, along with persistent geopolitical risks, temper investors’ appetite for riskier assets. This is evident from a weaker tone around the equity markets and should continue to act as a tailwind for the safe-haven Gold price. Traders might also opt to wait for this week’s release of the US inflation figures before placing aggressive directional bets. Nevertheless, the supportive fundamental backdrop and the emergence of some dip-buying suggest that the path of least resistance for the XAU/USD is to the upside.
Gold price bulls seem reluctant amid elevated US bond yields and bullish USD
- The US Bureau of Labor Statistics (BLS) reported on Friday that Nonfarm Payrolls rose by 256,000 in December, well above the 212,000 in the previous month and market expectations for a reading of 160,000.
- Other details of the report showed that the Unemployment Rate unexpectedly ticked lower to 4.1% from 4.2% and annual wage inflation, as measured by the change in the Average Hourly Earnings, declined to 3.9%.
- This comes on top of the Federal Reserve’s (Fed) hawkish shift in December and dampens hopes for further interest rate cuts by the US central bank, pushing the US Treasury bond yields and the US Dollar higher.
- The yield on the benchmark 10-year US government bond has spiked to its highest level since late 2023, while the USD Index, which tracks the Greenback against a basket of currencies, shot to over a two-year peak.
- Elevated US bond yields and a bullish USD act as a headwind for the Gold price on Monday, though the risk-off mood lends some support to the safe-haven bullion and helps limit any meaningful corrective slide.
- The Office of Foreign Assets Control (OFAC) said on Friday that the US and the UK administration imposed tougher sanctions against Russia’s oil industry, targeting nearly 200 vessels of the so-called shadow fleet.
- The Russian Defence Ministry said on Sunday that Russian forces have carried out strikes on Ukrainian military airfields, personnel and vehicles in 139 locations using its air force, drones, missiles and artillery.
- In an apparent violation of the ceasefire agreement between Israel and Hezbollah, more Israeli strikes have been reported in Lebanon. Moreover, Israeli strikes continued across Gaza amid renewed ceasefire talks.
Gold price bulls have the upper hand, sustained move beyond $2,700 awaited
From a technical perspective, any further slide is likely to attract fresh buyers and find decent support near the $2,665-2,664 area. A convincing break below, however, could make the Gold price vulnerable to accelerate the downfall towards the $2,635 region. The downward trajectory could extend further towards the $2,605 confluence, comprising the 100-day Exponential Moving Average (SMA) and a multi-week-old ascending trend-line support.
On the flip side, bulls might now wait for a sustained strength beyond the $2,700 mark before placing fresh bets. Given that oscillators on the daily chart have been gaining positive traction and are still far from being in the overbought territory, the Gold price might then climb to the $2,715 region en route to the $2,730-2,732 area and the $2,746-2,748 supply zone.
US Dollar PRICE Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.15% | 0.37% | -0.19% | -0.02% | -0.16% | -0.06% | -0.07% | |
| EUR | -0.15% | 0.20% | -0.27% | -0.11% | -0.17% | -0.16% | -0.13% | |
| GBP | -0.37% | -0.20% | -0.46% | -0.31% | -0.38% | -0.35% | -0.33% | |
| JPY | 0.19% | 0.27% | 0.46% | 0.15% | -0.06% | -0.03% | 0.12% | |
| CAD | 0.02% | 0.11% | 0.31% | -0.15% | -0.19% | -0.04% | 0.04% | |
| AUD | 0.16% | 0.17% | 0.38% | 0.06% | 0.19% | -0.01% | 0.06% | |
| NZD | 0.06% | 0.16% | 0.35% | 0.03% | 0.04% | 0.01% | 0.02% | |
| CHF | 0.07% | 0.13% | 0.33% | -0.12% | -0.04% | -0.06% | -0.02% |
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).
