Gold firm above $4,200 on broad dovish repricing for December

NEW YORK (November 28) Gold (XAU/USD) rises over 1% on Friday amid a scarce economic docket, but traders are pricing further easing by the Federal Reserve (Fed) at the next meeting, pushing the non-yielding metal past the $4,200 mark for the first time in the last ten days.

Bullion surges over 1% in thin holiday trade as easing expectations climb toward 87% despite mixed US data

Expectations that the Federal Reserve would continue its easing cycle increased as the CME FedWatch Tool shows odds for a 0.25% reduction at the December 9-10 meeting at 87%,. Meanwhile, Fed officials remained muted since Wednesday, heading for Thanksgiving, as the blackout period begins on Saturday.

Policymakers at the Federal Open Market Committee (FOMC) remain split about the next move. Nonetheless, the latest comments from New York Fed John Williams and Fed Governor Christopher Waller poured cold water on the hawks and strengthened the doves' position ahead of the meeting.

US data has been mixed, with inflation on the producer side seeming to be stalling after the PPI rose to 3.1% YoY in July, before printing back-to-back readings of 2.7%. Even though this opens the door for further easing, the latest Initial Jobless Claims print shows the jobs market remains solid, despite giving signs of weakness.

Given the backdrop, Gold prices could continue to edge up. However, developments pointing towards peace talks between Russia and Ukraine, led by the White House, could cap bullion’s advance amid an obvious sentiment shift.

Next week, the US economic docket will feature the November ISM Manufacturing and Services PMIs, Industrial Production, the ADP Employment Change and Initial Jobless Claims for the week ending November 29.

Daily market moves: Gold advances, but threatened by Russia-Ukraine war de-escalation

• The US Dollar Index (DXY), which tracks the buck’s performance versus six currencies, is down 0.04% at 99.49. At the same time, US Treasury yields recovered, with the 10-year US Treasury note yield up three basis points to 4.023%. US real yields, which correlate inversely to Gold prices, are also up two and a half basis points to 1.785%.
• Ukrainian President Zelensky said that Ukraine and US delegations will meet this week to work out a formula for peace and security, as discussed in Geneva. Meanwhile, Russia wants to move towards peace in Ukraine, despite its belief that Ukrainian President Zelensky is not legitimate.
• Russian President Vladimir Putin said Thursday that President Donald Trump’s proposal “could serve as a basis” for future negotiations but emphasized that no final version exists. Putin reiterated that hostilities will cease only if Ukrainian forces withdraw.
• Physical Gold exports from Hong Kong to China dipped, an indication that the Bullion might remain subdued in the near term.

FXStreet