Gold Fails to Hold Above 2,000 for the Third Day
The gold price increased slightly in the quiet trading session on Thursday as the US dollar declined during the Thanksgiving holiday.
XAU/USD rose by 0.10% yesterday in a very quiet trading session due to the decline of the US dollar, while the U.S. treasury market remained closed for the holiday. Gold maintained its position above the important 1,990 level. The strength of XAU/USD is largely attributed to the growing anticipation that the Federal Reserve (Fed) may have concluded its cycle of interest rate hikes. Economic reports suggest that the U.S. central bank has effectively eased inflation, reinforcing expectations of a more dovish Fed policy. Lower interest rates decrease the opportunity cost of holding gold. 'Absent any fresh influences, I still don't think that gold has the momentum to maintain prices much above 2,000 for the rest of the year,' said StoneX analyst Rhona O'Connell.
In the Asian and early European trading sessions, gold prices rose due to the weakening of the US dollar. In terms of geopolitical developments, Israel and Hamas initiated a four-day ceasefire this Friday, marking the first break in the conflict that has been ongoing for nearly seven weeks. Easing tensions may put downward pressure on XAU/USD, but some analysts expect the metal to remain strong. 'Spot gold may retest a resistance at $1,999 per ounce, a break above which could lead to a gain into the 2,009–2,016 range,' said Reuters analyst Wang Tao.
EUR/USD Rises as Economic Sentiment Improves Slightly
The euro (EUR) gained 0.16% on Thursday as Purchasing Managers Indices (PMIs) came out better-than-expected. However, trading activity remained subdued due to the holidays in the U.S. and Japan.
The results of the latest PMI surveys showed that the downturn in eurozone business activity remains persistent but is easing somewhat. Although the figures indicated that the eurozone's economy may contract again this quarter, the market's reaction was primarily bullish. Furthermore, European Central Bank (ECB) officials have recently suggested that interest rates may have to remain higher for longer. Pierre Wunsch, the Belgian policymaker, told the German newspaper that there is a possibility for another rate hike.
EUR/USD was essentially unchanged during the Asian and early European trading sessions. Today, two important events may affect the currency. Germany will release its Ifo Business Climate report at 9:00 a.m. UTC. Then, the S&P will publish U.S. PMIs at 2:45 p.m. UTC. Both reports will shed more light on how businesses in the two countries consider their current and future economic conditions. S&P PMIs should add extra volatility to the market. EUR/USD may rise above 1.09400 if U.S. PMIs come out lower than expected.