- Gold price rises to a two-week high on Wednesday amid renewed dollar selling.
- The upward revision to US GDP makes up for the dismal ADP report and does not impress.
- Traders also seem reluctant ahead of Federal Reserve Chairman Jerome Powell’s speech.
the price of gold gains strong positive traction for the second day in a row and rises to a two-week high during the early North American session on Wednesday. The momentum, however, stalls near the $1,765 area after the release of US macroeconomic data, although the fall seems limited amid a weaker dollar, which tends to boost demand for the commodity denominated in dollars.
The weakening of the dollar continues to support the price of gold
The US dollar remains on track for its worst monthly performance since September 2010 amid hopes the Federal Reserve will soften its hawkish stance on looming recession risks. Current market prices indicate a higher probability of a relatively minor rate hike of 50 basis points at the next Federal Open Market Committee (FOMC) meeting on December 13-14. This is evident from the softer tone around US Treasury yields, which, in turn, continues to act as a headwind for the dollar.
Disappointing ADP report fails to impress dollar bulls
Intraday dollar selling remains steady following the release of the disappointing ADP report, which shows US private sector employers added 127,000 jobs in November. The main data was well below the previous month’s reading of 239,000 and the 200,000 forecast. This, in turn, tempers expectations of any positive surprise from Friday’s official employment report (NFP). That said, an upward revision to the US Gross Domestic Product (GDP) helps offset the disappointment.
Bullish US GDP Report Caps Gold Price Gains Ahead of Powell’s Speech
The preliminary report (second estimate) released by the US Bureau of Economic Analysis showed that the economy expanded at an annualized rate of 2.9% during the third quarter, up from 2.6% previously reported. This helps limit any deeper losses for the US dollar and caps the price of gold. Traders also seem reluctant to make aggressive bets ahead of Fed Chairman Jerome Powell’s speech, which will be looked at for clues on future hikes. and will provide a further directional boost to the non-yielding yellow metal.
technical perspective
From a technical perspective, any further pullback seems to find some support near the $1,748 area (daily low). This is followed by the $1,740 to $1,739 zone, which if broken decisively will nullify any short-term positive outlook and leave the gold price vulnerable. The downside could then extend to intermediate support at $1,725, or a nearly two-week low hit on Wednesday, en route to the $1,700 signal.
On the other hand, momentum beyond the daily high, around the $1,765 zone, has the potential to push the price of gold up to the $1,770-$1,772 zone. A bit of strength on the follow-through will be seen as a new trigger for the bulls and will extend the bullish trajectory to the $1,778 region. The next major hurdle is the $1,786 area, the highest since mid-August reached earlier this month, above which XAU/USD could try to recapture the psychological $1,800 level.
Key levels to watch
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
