Spot Gold Prices Surge Amid Geopolitical Tensions and Speculation of Fed Rate Cut
In Asian morning trading, spot gold prices saw a significant rise from an intraday low of $2,633.85 per ounce to a peak of $2,645.52 per ounce. FXStreet analyst Christian Borjon Valencia pointed out that gold has remained above the $2,600 mark, supported by ongoing geopolitical tensions and speculation regarding a possible rate cut by the U.S. Federal Reserve.
According to the Chicago Mercantile Exchange's “Fed Watch Tool,” market expectations for a Federal Reserve rate cut in December have increased to 70%, up from about 55% earlier this week. Valencia noted that such expectations could result in lower U.S. Treasury yields, potentially weakening the dollar and providing support for gold prices.
Geopolitical factors are also playing a role in the gold price's recent movements. Reports from Reuters on Friday indicated that Russian President Vladimir Putin issued a stern response to Ukraine's use of Western missile systems against Russian territory. During a meeting in Kazakhstan, Putin hinted at the potential use of Russia’s new "Hazel Tree" hypersonic missiles to target decision-making centers in Kyiv. This comes amid ongoing hostilities, with the Ukrainian Air Force reporting widespread attacks on Ukrainian infrastructure, particularly in the western regions of the country.
Meanwhile, a 60-day ceasefire agreement between Israel and Lebanon has been reached, offering some respite in the Middle East. Valencia remarked that, despite this temporary de-escalation, the intensification of the Russian-Ukrainian conflict could maintain gold prices above $2,600 per ounce.
Aneeka Gupta, head of macroeconomic research at WisdomTree, also commented on the elevated geopolitical risks due to the ongoing Russia-Ukraine war. She highlighted that statements from U.S. President-elect Donald Trump regarding potential tariffs on Canada and Mexico have further contributed to market uncertainty, adding to the support for gold.
From a technical perspective, Valencia observed that gold prices are currently consolidating between the 50-day Simple Moving Average (SMA) at $2,668 per ounce and the 100-day SMA at $2,572 per ounce. He noted that there could be more upside potential for gold if buyers can clear key resistance levels.
Valencia stated, "If gold manages to break above the 50-day SMA, the next target would be $2,700 per ounce. If this level is breached, the price could then aim for the psychological barrier of $2,750 and potentially the all-time high of $2,790 per ounce." Conversely, if the bears manage to push prices below $2,600, it could lead to a test of the 100-day SMA at $2,572, followed by the swing low of $2,536 recorded on November 14.
