Gold Bounces Off Multi-Week Low but Lacks Bullish Conviction
Gold prices showed a slight recovery on Thursday, bouncing off a multi-week low, but the rebound is not enough to ignite strong buying interest. The precious metal had fallen to around the $2,604–$2,605 range, marking its lowest point in nearly three weeks, before seeing a small uptick. However, the rise lacks the momentum needed to signal a full recovery.
US Dollar Strength Capping Gold’s Upside
The recent optimism for a 25-basis-point interest rate cut by the Federal Reserve in November continues to support the US dollar (USD). This stronger dollar is putting pressure on gold prices, as the non-yielding metal struggles to gain traction. The USD recently reached an eight-week high, which acts as a headwind for gold.
Market Awaits Key US CPI Data
As gold struggles to find direction, traders are opting to remain on the sidelines, awaiting the release of the crucial US Consumer Price Index (CPI) report. This report, scheduled for later in the day, could influence market expectations about the size of the Federal Reserve’s rate cut in November. Any surprises in the data could lead to a stronger dollar, further limiting gold’s upside potential.
Global Geopolitical Tensions Provide Short-Term Safe-Haven Opportunities
In addition to the US inflation data, traders are also closely monitoring developments in the Middle East. The ongoing conflicts in the region may create short-term demand for gold as a safe-haven asset, providing some support to prices.
In summary, while gold prices have recovered slightly from recent lows, the lack of strong buying interest and a rising USD ahead of the US CPI report suggests that gold’s upside may remain capped in the near term.
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