GOLD Analysis
Afternoon: Gold Extends Rally on Geopolitical Risks and Fed Speculation
Highlights:
- Geopolitical tensions between Russia and Ukraine drive strong safe-haven demand for gold.
- Fed rate-cut expectations and easing inflationary pressures support bullish gold momentum.
- Unexpected U.S. labor market resilience adds complexity to the Fed's monetary policy outlook.
Overview:
Gold prices surged to $2,680 per ounce on Friday, marking a fifth consecutive daily increase and heading toward a weekly gain of nearly 5%. This robust rally reflects heightened demand for safe-haven assets as geopolitical tensions escalate and Federal Reserve monetary policy speculation intensifies.
Geopolitical Risks Spur Safe-Haven Demand
The ongoing conflict between Russia and Ukraine has been a key driver of gold's recent rally. Earlier this week, Ukraine fired Western-supplied missiles into Russia for the second time, and in retaliation, Russia launched its first intercontinental ballistic missile at Ukraine. These developments have significantly increased geopolitical risks, prompting investors to seek safety in gold amidst the uncertain global landscape.
Fed Policy Outlook Remains in Focus
The Federal Reserve’s future interest rate path continues to influence gold prices. U.S. jobless claims fell unexpectedly, suggesting resilience in the labor market, which adds complexity to the Fed's monetary easing plans. Remarks from Fed Bank of Chicago President Austan Goolsbee reinforced expectations for rate cuts, with confidence expressed in the ongoing decline in inflation. Markets are pricing in a 25 basis point rate cut in December, which would reduce the opportunity cost of holding non-yielding assets like gold, further boosting its appeal.
Actionable Insight
Buy gold near $2,688, targeting $2,715 with a stop loss below $2,660.
Support and Resistance Levels:
