Gold sticks to positive bias near six-week high amid dovish Fed expectations

Gold climbs to a six-week high on Monday, though it lacks strong follow-through buying.
A softer risk tone, China’s economic woes, and geopolitical risks underpin the commodity.
Bulls pause for a breather ahead of the US macro data scheduled at the start of a new month.

Gold (XAU/USD) seesaws between tepid gains/minor losses heading into the European session and currently trades just below its highest level since October 21, touched earlier this Monday. The recent dovish remarks from several Federal Reserve (Fed) officials reaffirmed market expectations for another interest rate cut by the US central bank in December. This has been a key factor behind a one-week-old US Dollar (USD) downtrend and continues to act as a tailwind for the non-yielding yellow metal.

Apart from this, geopolitical uncertainties stemming from the escalating Russia-Ukraine war and the cautious market mood offer additional support to the safe-haven Gold price. The intraday uptick, however, lacks follow-through buying as the XAU/USD bulls seem reluctant and opt to wait for this week’s key US macro releases, starting with the ISM Manufacturing PMI later today, for some meaningful impetus. This, in turn, warrants some caution before positioning for any further appreciating move.

Daily Digest Market Movers: Gold bulls retain control as Fed rate cut bets undermine USD

The recent dovish remarks from US Federal Reserve Governor Christopher Waller and New York Fed President John Williams strengthened the case for another interest rate cut this month. Moreover, a mixed set of US economic data released last week did little to dent market expectations and continues to underpin the non-yielding Gold.
White House economic adviser Kevin Hassett said on Sunday that he would be happy to serve as the next chairman of the US central bank if chosen by President Donald Trump. Hassett is expected to enact Trump’s calls for sharply lower interest rates, pushing the precious metal to a six-week high during the Asian session on Monday.
Dovish Fed expectations continue to exert downward pressure on the US Dollar, which drops to a nearly two-week low and turns out to be another factor acting as a tailwind for the precious metal. Apart from this, a generally softer tone around the Asian equity markets is seen, offering additional support to the safe-haven commodity.
A private survey released on Monday showed that business activity in China’s manufacturing sector unexpectedly slipped back into contraction territory. This follows Sunday’s release of the official PMI, which shrank for an eighth straight month, and weighs on investors’ sentiment amid persistent geopolitical uncertainties.
Meanwhile, Ukrainian naval drones hit two oil tankers from Russia’s so-called shadow fleet as they travelled through the Black Sea. Furthermore, US Secretary of State Marco Rubio said that the latest talks with Ukrainian officials were very productive, though he noted that more work remains to be done towards ending the war.
Traders now look forward to the release of the US ISM Manufacturing PMI for some impetus later during the North American session. Apart from this, this week’s important US macro releases, scheduled at the beginning of a new month, will drive the USD demand and influence the near-term trajectory for the XAU/USD pair.

Gold needs to find acceptance above $4,250 to back the case for further appreciating move

From a technical perspective, a sustained strength and acceptance above the $4,250 area will be seen as a fresh trigger for bulls and pave the way for a further near-term appreciating move for the Gold price. Given that oscillators on the daily chart have been gaining positive traction, the commodity might then surpass an intermediate hurdle near the $4,277-4,278 region and aim to reclaim the $4,300 mark.On the flip side, the Asian session low, around the $4,200 neighborhood, now seems to protect the immediate downside. Any further weakness could be seen as a buying opportunity and find decent support near the $4,155-4,153 region. A convincing break below might prompt some technical selling and make the Gold price vulnerable to accelerate the fall towards the $4,100 mark en route to the $4,073 confluence. The latter comprises the 200-period Exponential Moving Average (EMA) on the 4-hour chart and an ascending trend-line extending from late October