Gold This Shiny and Legendary Metal Returns to Global Focus

Forexology
2024-12-11 08:56 AM

Gold, the shining and legendary metal, has once again become the center of global attention. Recently, its price, which had rapidly fallen from a two-week high, has stabilized around $2,675-$2,674, attracting the support of buyers. Now, traders and investors are eagerly awaiting the release of the U.S. Consumer Price Index (CPI) report — a report that could shape gold's future direction over the coming weeks.

Why is Gold Facing Risk and Opportunity?

Treasury Yields and the Strength of the Dollar
Expectations of cautious Federal Reserve policies in reducing interest rates have driven U.S. Treasury yields higher and strengthened the dollar over the last three days. This has created a strong barrier, halting gold's price growth.
Geopolitical Tensions and Gold as a Safe Haven
- Israel’s attacks on Syria and historical ground advancements have plunged the Middle East into instability.
- In Ukraine, Zelensky's approval of a budget for advanced drones raises concerns about potential foreign military involvement in the war.
- Trump's threats to impose heavy tariffs on BRICS nations and trading partners risk disrupting global trade flows.
Central Banks and Their Role in Gold Prices
There is speculation that the Bank of Canada will reduce interest rates, and the European and Swiss central banks are likely to adopt accommodative policies. Such actions could serve as a positive force for gold prices.
U.S. Inflation Report: A Market Compass
Forecasts suggest that the CPI for November will show a 0.3% monthly increase and a 2.7% year-over-year growth, with core inflation expected to remain at 3.3%. These figures will have significant implications for future Federal Reserve policies.

Technical Analysis: Where is Gold Heading?

Gold's price breaking below the resistance range of $2,650-$2,655 is a strong indicator of market bullishness. Daily chart indicators show a positive outlook, though gold still faces critical hurdles.

Key Levels:

Support Levels:
- $2,630: Breaking below this could push prices down to $2,600.
Resistance Levels:
- $2,700: A break above this level would open the door to $2,720-$2,722.
- $2,735: Crossing this could shift the market firmly in favor of buyers.
- $2,760: Next upward target.
- $2,790: Historical record price.

Daily Gold Price Movements

Day	Gold Price (USD/Ounce)	Daily Change (%)
Monday	2,685	-0.5%
Tuesday	2,678	-0.3%
Wednesday	2,674	-0.4%
Thursday	2,700	+0.9%

Key Factors Influencing Gold Prices

Factor	Impact on Gold Prices
High Treasury Yields	Bearish pressure
Strengthened U.S. Dollar	Reduces gold's value
Geopolitical Instability	Increases demand for safety
Accommodative Policies by Central Banks	Positive force for gold

Gold has always been a symbol of safety and value in the volatile economic world. With the U.S. inflation report drawing closer, markets are on edge. Breaking key resistance levels could push gold toward new highs, while breaching support levels may accelerate its decline. The world of gold awaits a thrilling future.

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