GOLD Analysis
Afternoon: Gold Prices Edge Higher Amid Mixed Signals from U.S. Economy and Federal Reserve Policies
Highlights:
- U.S. Monetary Policy: Anticipation of slower rate cuts limits gold's upside.
- Economic Resilience: Strong U.S. data supports the dollar, reducing gold's appeal.
- Physical Demand: Increased Indian demand cushions against broader price pressures
Overview:
Gold prices saw a modest increase, supported by steady physical demand and easing price levels. However, recovery remains limited due to ongoing discussions about the pace of U.S. Federal Reserve interest rate cuts. Strong economic indicators, including robust retail sales data for October, have reinforced expectations of a resilient economy, reducing the likelihood of aggressive rate cuts in the near term. Consequently, traders have scaled back expectations for a December rate cut, keeping gold prices in check.
The U.S. retail sales data for October showed a slight increase above market expectations, suggesting a strong start to the fourth quarter for the U.S. economy. This aligns with hawkish sentiments from Federal Reserve officials, with at least seven members set to provide further insights this week. These developments have fueled uncertainty about the Federal Reserve’s rate-cut trajectory, a key factor influencing gold's appeal as a non-yielding asset.
On the demand front, physical gold premiums in India have surged to a near four-month high, fueled by a rise in consumer demand as gold prices dipped. This highlights the underlying support for gold despite global monetary policy challenges.
Action Strategy:
- Buy Position: Enter on dips around $2588.
- Target: $2612.
- Stop Loss: Below $2575.
Support and Resistance Levels:
