Gold

Bullion market watch: Gold inches higher on geopolitical risks and Fed outlook

 

Gold prices gained further momentum on December 04, supported by safe-haven demand as geopolitical tensions escalated. These tensions were coupled with increasing investor anticipation of key economic figures in the United States. The precious metal remained a focal point as markets awaited the US jobs report as well as Federal Reserve Chair Jerome Powell’s insightful speech on the trajectory of interest rates.

 

Safe-Haven Demand Lifts Gold Prices

 

Spot gold gained 0.2% to $2,649.09 per ounce at 0555 GMT and US gold futures were up 0.1% to $2,671.20. Analysts attributed the slight increase to South Asian as well as Eurozone volatilities.

“Gold has appreciated slightly on safe-haven buying because of the geopolitical tensions rising in South Asia and the Eurozone,''said Jigar Trivedi, a senior analyst at Reliance Securities.

Gold has a reputation for being regarded as a safe-haven asset, especially during political and economic turbulence. The metal’s appeal is further boosted by expectations of a low-interest-rate environment which reduces the opportunity costs of holding non-interest-earning bullion.

 

Jobs Data and Fed Speech in Focus

 

Investors are focusing on expectations of the US ADP employment report due at 1315 GMT on December 04, ahead of the payrolls report on November 29. Meanwhile, Federal Reserve Chair Jerome Powell is set to make his last speech before the Federal Reserve meeting in December wherein he may drop hints on the next monetary policy plans.

According to a Reuters report, data obtained on December 03 showed that there was an average increase in the number of job vacancies in the US in October as well as a reduction in layoffs. A strong job growth could make the Fed to be very careful when deciding on where to reduce the interest rates to.

Traders who operate via FedWatch Tool anticipate a 73% likelihood of a 25-bp cut before the end of this year; 80 basis points before the end of next year.

 

Gold’s Long-Term Prospects Remain Bullish

 

Kelvin Wong, senior market analyst for Asia Pacific at OANDA, highlighted the ongoing bullish outlook for gold. “The longer-term bullish trend for gold remains intact amid rising trade tensions and potential strain on US budget deficits,” he said.

The technical view for the short term represents signs of fluctuation. Reuters technical analyst Wang Tao pinpointed that spot gold could test support at $2,621 per ounce with a break below potentially pushing prices toward the $2,594-$2,608 range.

 

Other Precious Metals Show Mixed Performance

 

Amongst other precious metals remained at a fix with spot with silver at $31.00 an ounce for other precious metals. Platinum was down by 0.4% to $949.61, while palladium declined by 0.3% to $968.95.

Market participants are still sticking to factors that are political and economic in order to predict the direction of the gold market.