Last week’s developments showed that gold prices continued to hold firmly above the USD 4,000/oz support level, but analysts warn that downside risks are rising as the precious metal seems to be struggling to break through the USD 4,100/oz resistance…
This week, U.S. economic data will continue to shape expectations for Federal Reserve (Fed) interest rates, thereby influencing gold prices.
For the whole of last week, spot gold on the international market fell by about 0.4%. The main downward pressure came from investors scaling back bets on the likelihood of a Fed rate cut at the December meeting. At one point during the week, the probability of a 0.25 percentage point rate cut next month dropped to 25%, before rebounding to nearly 70% by week’s end.
Gold prices have risen more than 55% this year, but recently have stalled in the USD 4,000–4,100/oz range. While long-term supportive factors remain in place, short-term downward pressures have emerged due to a strengthening U.S. dollar and persistently high U.S. Treasury yields. According to many experts, gold may find it difficult to break out before the upcoming Fed meeting, scheduled for December 9–10, as interest-rate expectations remain highly uncertain due to the lack of consensus among policymakers.
Although market bets on a December rate cut are hovering around 70%, economists see the odds as closer to 50–50. In this context, U.S. economic data will play a major role in shaping gold’s direction over the next two weeks.
Speaking to Kitco News, Kathy Lien, director at Proptraderedge.com, said that a lot of negative expectations about the U.S. economy have already been priced in, so any upcoming data that beats forecasts could put downward pressure on gold. “Over the next three months, gold will be seen as a crowded trade. Any positive data this week could create downside risk for gold,” Lien said.
She noted that she will pay particular attention to retail sales during the Thanksgiving holiday week. If the data is strong, indicating that U.S. consumers are still spending robustly, the Fed will have even less reason to adjust interest rates in December.
Barbara Lambrecht, an analyst at Commerzbank, maintains a neutral view on gold’s near-term outlook, saying the market will depend heavily on Fed rate signals. “If expectations of a Fed rate cut increase, gold will get a boost. From now until the Fed meeting, there are still one or two important data points to be released. However, if expectations do not improve, gold is likely to remain sluggish,” she said.
A report by TD Securities noted that investment demand for gold will remain weak until the Fed provides a clearer direction on rate policy. “Gold prices have been in an accumulation phase but have yet to break out. Central-bank gold purchases—though slowing—remain an important anchor. Still, this demand alone is unlikely to generate the explosive gains seen in recent months. Retail investors remain highly sensitive to Fed rate expectations. Could a prolonged delay in Fed rate cuts be the catalyst for a significant pullback from the gold market?” the report stated.
Lukman Otunuga, senior analyst at FXTM, forecasts that gold will remain trapped in a narrow range this week. “Retail sales and wholesale inflation data, along with other releases this week, may offer clearer insights into the health of the U.S. economy. If the data disappoints, expectations for Fed rate cuts will rise, potentially pushing gold above USD 4,100/oz. Conversely, stronger-than-expected numbers will reduce the likelihood of rate cuts and could drive gold below the key USD 4,000/oz support, possibly toward the USD 3,970–3,930 range,” Otunuga said.
Some experts believe that the recent downturn in the cryptocurrency market could provide fresh upward momentum for gold. Last week, bitcoin fell more than 10%, threatening to break below the USD 80,000 support level. From its all-time high of over USD 126,000 earlier this year, bitcoin has now dropped more than 30%.
According to Chris Louney, chief strategist at RBC Capital Markets, despite short-term uncertainties, gold’s ability to hold the critical USD 4,000/oz level should be viewed as a positive signal.
“I see the holding of the USD 4,000/oz level as a good sign, especially after the U.S. government reopened and the release of economic data resumed. This shows that long-term interest in gold remains strong,” he said.
Key U.S. economic data scheduled for release this week includes the Producer Price Index (PPI) and retail sales on Tuesday; durable goods orders, the preliminary Q3 GDP report, and the Personal Consumption Expenditures (PCE) index on Wednesday. On Thursday, U.S. financial markets will be closed for the Thanksgiving holiday.
At 6:25 a.m. this morning (Nov. 24, Vietnam time), spot gold in the Asian market rose USD 8/oz from last week’s close in the U.S., equivalent to a 0.2% gain, trading at USD 4,074.2/oz. Based on Vietcombank’s USD selling rate, this corresponds to about VND 129.5 million per tael.
At the same time, Vietcombank listed the USD at VND 26,142 (buying) and VND 26,392 (selling), unchanged from last week’s closing levels.
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