28 Nov 2024

• Gold price attracts some dip-buying amid trade war concerns and geopolitical tensions. 
• Rebounding US bond yields revive the USD demand and cap gains for the XAU/USD.
• Thin trading volumes on the back of a US holiday warrant caution for aggressive traders
• Gold price (XAU/USD) has recovered from an intraday decline to the $2,620 level and is currently trading close to the daily peak during the early part of the European session on Thursday, although it shows a lack of strong bullish momentum. Investors are apprehensive that the tariff proposals from US President-elect Donald Trump may adversely affect the global economic landscape. Additionally, the escalating conflict between Russia and Ukraine remains a significant factor that continues to support the demand for this safe-haven asset.
  
  Moreover, the anticipation of slower interest rate reductions by the Federal Reserve, reinforced by the generally positive US macroeconomic data released on Wednesday, has led to a slight increase in US Treasury bond yields. This development, in turn, has bolstered demand for the US Dollar (USD) and has limited the potential for further gains in the non-yielding Gold price. Furthermore, a favorable risk sentiment is also restraining bullish investors from making aggressive moves, particularly in light of the relatively low trading volumes due to a US holiday.
• Gold prices are finding it challenging to establish significant momentum due to a mix of fundamental indicators.
  
  On Wednesday, the US Bureau of Economic Analysis (BEA) announced that the Personal Consumption Expenditures (PCE) Price Index increased to 2.3% year-over-year in October, up from 2.1% in the prior month. The report further indicated that the core PCE Price Index, which omits the more volatile food and energy sectors, rose by 0.3% on a monthly basis, climbing from 2.7% in September to 2.8% in October.
  
  In a separate release, the US Commerce Department reported that the economy expanded at a robust annual rate of 2.8% in the third quarter, driven by a notable 3.5% increase in consumer spending. Additionally, the Labor Department revealed a decrease of 2,000 in the number of Americans filing new unemployment claims, bringing the total to a seasonally adjusted 213,000 for the week ending November 23.
  
  This positive news somewhat mitigates the disappointment stemming from US Durable Goods Orders, which rose by only 0.2% in October, falling short of the anticipated 0.5% increase. When excluding transportation, orders saw a modest rise of 0.1%, also below expectations.
  
  Concerns persist regarding the potential inflationary impact of policies proposed by US President-elect Donald Trump, alongside minutes from the Federal Open Market Committee (FOMC) suggesting a possible pause in rate easing if inflation remains high. The benchmark 10-year US Treasury yields have rebounded from a one-month low, aiding the US Dollar in recovering from a two-week low, which in turn applies downward pressure on gold prices.
  
  Earlier this week, Trump announced intentions to impose tariffs on a broad array of imports from Mexico, Canada, and China. Despite these developments, ongoing geopolitical tensions continue to support the demand for safe-haven assets, thereby limiting losses in the gold market.