Tensions in the Middle East continue to have an impact on the gold market. The exchange of fire between Hezbollah and Israel has cast doubts on the effectiveness of the ceasefire agreement. This uncertainty has prompted investors to seek safe assets, pushing up the safe-haven demand for gold. In addition, Israel’s air strikes on Lebanon and mutual accusations of violating the ceasefire agreement have further exacerbated market tensions.
In this case, the demand for gold as a safe-haven asset may increase, especially against the backdrop of rising geopolitical risks. However, fluctuations in market sentiment may also lead to sharp fluctuations in gold prices in the short term, and investors need to pay close attention to relevant news.
The impact of the Federal Reserve’s interest rate policy on the gold market cannot be ignored. Fed Governor Waller said he is inclined to cut the benchmark interest rate at the December meeting, believing that the current policy rate is already restrictive. The market generally expects the Fed to cut interest rates by 25 basis points in December, and Waller’s remarks further strengthened this expectation.
The strong performance of the US dollar usually puts pressure on gold denominated in US dollars. The US dollar index rose 0.59% on Monday, the strongest single-day performance in nearly four weeks, leading to higher costs for gold, which in turn puts pressure on gold prices. Investors need to pay attention to the upcoming economic data, especially those related to inflation and employment, to judge the future policy direction of the Federal Reserve.
Recently, the US manufacturing data has been strong. US manufacturing activity improved in November, and new orders increased for the first time in eight months. The release of these data has strengthened the US dollar and further suppressed gold prices. However, despite the improvement in manufacturing, the overall economy is still facing uncertainty. The ISM Manufacturing Purchasing Managers’ Index (PMI) rose to 48.4. Although it is still below the boom-bust line of 50, it is higher than market expectations, showing a certain resilience.
The market is full of expectations for the upcoming non-farm payrolls data, which is expected to provide important clues for the Federal Reserve’s monetary policy. If the employment data is strong, it may increase the pressure on the Federal Reserve to continue to cut interest rates in the coming months, otherwise it may support gold prices.
1 The escalation of the exchange of fire between Hezbollah and Israel has further tested the fragile fire-supporting agreement and brought safe-haven support to gold.
2 The market’s expectations for the Federal Reserve’s interest rate cut have increased, providing support for gold prices.
3 Gold is still in a relatively strong state in the short term.
4 The market is full of expectations for the non-agricultural data to be released this week.
In summary, gold is currently on the strong side.
Today, investors focus on the 1-hour support area below, and go long on gold after the gold price rebounds and stabilizes.
