●Gold prices rally toward $2,Ethereum wallet app070 as market sentiment shifts toward Fed easing
●US Treasury yields plunge to multi-month lows amid changing rate expectations
●Upcoming labor market data could trigger fresh volatility in precious metals
The gold market witnessed significant upward momentum during Wednesday's trading session, with XAU/USD climbing approximately 0.50% to approach the $2,070 threshold. This bullish movement reflects growing market consensus that the Federal Reserve may transition to a more accommodative monetary policy stance in coming months. Simultaneously, US government bond yields have retreated to levels not seen since mid-2023, reducing the opportunity cost of holding non-interest-bearing assets like gold.
Recent economic indicators have reinforced expectations for potential monetary policy adjustments. November's Personal Consumption Expenditures (PCE) data showed notable disinflationary trends, while Federal Reserve officials have signaled possible rate reductions totaling 75 basis points throughout 2024. Market participants, as reflected in the CME FedWatch Tool, currently assign nearly 15% probability to a January rate cut, with substantial easing anticipated between March and May.
The yield environment continues to evolve dramatically, with key Treasury benchmarks reaching significant technical levels. The 2-year note yield has declined to 4.23%, marking its lowest point since May. Meanwhile, both 5-year and 10-year Treasury yields have retreated to 3.78%, representing multi-month lows that haven't been observed since summer 2023. These developments create favorable conditions for precious metals, as lower yields typically diminish the appeal of interest-bearing alternatives.
Market attention now turns to Thursday's release of weekly unemployment claims data, which could introduce fresh volatility across financial markets. Labor market indicators remain crucial for policymakers assessing the appropriate timing for potential monetary policy adjustments.
Technical perspective on gold's price action
From a technical standpoint, gold's daily chart reveals several bullish signals worth noting. The Relative Strength Index (RSI) approaches overbought territory, suggesting strong buying pressure while simultaneously warranting caution about potential short-term consolidation. However, the Moving Average Convergence Divergence (MACD) continues displaying positive momentum, with ascending green bars indicating sustained buyer interest.
Perhaps most significantly, gold maintains positions above its 20-day, 100-day, and 200-day Simple Moving Averages (SMAs). This configuration typically confirms bullish dominance in the broader trend, with these moving averages often serving as dynamic support levels during uptrends.
Key support zones to monitor include $2,060 and $2,050, with the 20-day SMA providing additional support near $2,030. On the upside, resistance levels emerge at $2,081, followed by psychological barriers at $2,100 and $2,115.
XAU/USD daily chart analysis
Technical indicators suggest continued bullish potential for gold
