Gold prices eased during early European trading on Thursday, with XAU/USD slipping below the $4,350 level as traders locked in profits following a recent rally. The pullback comes after the precious metal touched seven-week highs, while a modest rebound in the US Dollar added short-term pressure.
Despite the intraday decline, downside risks for gold appear limited. Recent US labor market data strengthened expectations that the US Federal Reserve will move toward further interest rate cuts, weighing on the dollar in broader terms. A lower interest rate environment typically reduces the opportunity cost of holding non-yielding assets such as gold, offering medium-term support to prices.
Geopolitical risks remain another key factor underpinning the yellow metal. Tensions have escalated after Venezuela deployed its navy to escort oil shipments amid US threats of a blockade targeting the country’s oil industry. Such developments tend to increase demand for traditional safe-haven assets, including gold.
Market participants are now focused on the release of US Consumer Price Index (CPI) data later on Thursday. Headline CPI is expected to rise 3.1% year-on-year in November, while core inflation is forecast to increase 3.0% over the same period. In addition, weekly US Initial Jobless Claims data will also be closely monitored for further signals on the health of the labor market.
Daily digest market movers: gold retreats ahead of key CPI release
Venezuela’s government has ordered its navy to escort vessels carrying petroleum products from its ports, heightening the risk of confrontation with the United States after President Donald Trump announced a “blockade” aimed at Venezuela’s oil sector.
Speaking in a national address early Thursday, Trump said the next Federal Reserve chair would be someone who strongly favors lower interest rates. He also indicated that an announcement regarding the successor to current Fed Chair Jerome Powell would be made soon.
Fed Governor Christopher Waller said on Wednesday that further rate cuts may be appropriate to bring policy back toward neutral, according to Bloomberg. However, he cautioned against moving too quickly while inflation remains elevated.
Atlanta Fed President Raphael Bostic stated earlier this week that he did not support cutting rates at the most recent meeting and sees no justification for rate reductions next year unless inflation shows clearer signs of cooling.
Data from the US Bureau of Labor Statistics showed that Nonfarm Payrolls rose by 64,000 in November, following a revised decline of 105,000 in October. The Unemployment Rate edged up to 4.6% from 4.4%.
According to LSEG estimates, futures markets are now pricing in a 31% probability of a Fed rate cut next month, up from 22% before the latest employment report.
Gold retains a positive long-term technical bias
From a technical standpoint, gold is trading modestly lower on the day but continues to maintain a constructive broader outlook. On the four-hour chart, prices remain above the key 100-day Exponential Moving Average, signaling that the underlying trend remains supportive.
Volatility indicators also point to potential upside, with Bollinger Bands expanding and the 14-day Relative Strength Index holding above the midline. This configuration suggests that bullish momentum could resume if buying interest returns.
A sustained move above the upper Bollinger Band near $4,352 could pave the way for another test of the record high at $4,381, with the $4,400 psychological level acting as the next upside target.
On the downside, a failure to regain momentum and a move below the December 17 low at $4,300 could attract additional selling pressure toward the December 16 low of $4,271. Further weakness may expose the 100-day EMA, currently located around $4,233, as a key downside support level.
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