The Gold Price Hits a New All-Time High
On Friday, the gold (XAU) price recorded its largest daily gain in almost two months, surging by 1.73% as market participants considered the latest Jerome Powell's, the Federal Reserve (Fed) Chairman, speech dovish.
Powell said the U.S. monetary policy was already rather restrictive, suggesting that the rate hiking cycle is over. However, the Fed Chair mentioned that the central bank isn't considering cutting rates right now. 'Gold bulls are pointedly ignoring the warning that it was premature to speculate on easing rates,' said Tai Wong, a New York-based independent metals trader. Still, according to the CME FedWatch Tool, the market is currently pricing in a 59% probability of a rate cut in March and thinks the U.S. base rate will be under 4% by the end of 2024.
Early Monday, gold surged over 3% and surpassed 2,130, reaching new record highs. XAU/USD then trimmed most gains but continued to trade above the important 2,080 level. Analysts believe the changing sentiment among the Fed officials was the main reason for the strong rally in gold over the past few days. At the same time, some doubt whether such a strong momentum in gold is sustainable.
"Prices may have entered the overbought territory, and gold has been known to price in monetary policy expectations prematurely over the past two years," Standard Chartered analyst Suki Cooper said.
Overall, traders seem confident that the U.S. interest rates have reached their peak. Thus, bulls remain in control and will probably continue to buy the dips as long as XAU/USD is trading above 2,040. Also, fresh long positions may hit the market due to rising geopolitical tensions in the Middle East.
"Spot gold may retest resistance at 2,112 per ounce, a break above which could lead to a gain into a $2,122–$2,137 range," said Reuters analyst Wang Tao.
AUD/USD Consolidates Near 0.66500 Ahead of the RBA Rate Decision
The Australian dollar (AUD) gained 1.0% on Friday as the U.S. dollar weakened after the lower-than-expected ISM Manufacturing Purchasing Managers Index (PMI) report was released. Also, the market considered Jerome Powell's, the Federal Reserve (Fed) speech dovish, which put additional bullish pressure on AUD/USD.
On Friday, Powell stated that the U.S. monetary policy is decelerating the economy as anticipated, with the benchmark overnight interest rate firmly in the area of restriction. Despite Powell reiterating the Fed's readiness to intensify policy tightening if necessary, traders considered that the cycle of rate increases has ended. As indicated by the CME's FedWatch tool, market prices in a 59% chance of a rate cut by the March meeting, rising from only a 21% chance over a week ago.
During the early European trading session, the Australian dollar declined towards 0.66500, returning from its four-month high. The Reserve Bank of Australia (RBA) will have the last meeting of the year on 5 December and should announce its rate decision at 00:30 a.m. UTC. Last week's softer inflation and retail sales figures have eased concerns among traders about further rate hikes. According to a Reuters survey, the market expects the RBA to keep the base rate unchanged on Tuesday, with a rate cut not coming until Q4 2024. Another important data release that will likely affect AUD pairs is the Gross Domestic Product (GDP) report on Wednesday at 00:30 a.m. UTC. The Australian Bureau of Statistics will release quarterly GDP data, including the latest data on economic activity and inflation figures. Any disappointment here may provoke a sell-off in AUD/USD, potentially opening the way towards 0.66000.