Gold Prices Pull Back Amid Geopolitical Tensions and Fed Rate Cut Decisions

Gold prices showed a minor pullback due to the escalation of geopolitical tensions, hitting a low of $2,605 and currently trading around $2,646.

FOMC Minutes Reveal Rate Cut Decisions

The FOMC meeting minutes from November 6-7, 2024, revealed that the Fed unanimously decided to cut the federal funds rate by 25 basis points, bringing it to a range of 4.50%-4.75% due to slowing inflation and strong economic activity. The minutes suggest that more rate cuts may happen, with another possible cut in December. While inflation is easing, it is still above the Fed's 2% target, and employment gains have slowed, though unemployment remains low. In response to the minutes, U.S. Treasury yields rose slightly, indicating investor expectations of future policy changes. Investors should watch upcoming economic data and the next FOMC meeting on December 17-18 for more guidance.

Consumer Confidence Declines Slightly

The Conference Board Consumer Confidence Index for November 2024 is at 106.5, down from 107.0 in October. This shows a small decrease in consumer confidence, mainly due to worries about inflation and the economy. However, the index is still above 100, meaning that most consumers still feel positive about the current economic situation.

Rising Probability of Rate Hike

According to CME Fed funds rate data, the probability of a 25 basis point rate hike increased to 66.30% from 55.70% a week ago.

Technical Outlook for Gold Prices

As markets await U.S. PCE data for further direction, the technical outlook for gold prices shows them below short-term and long-term moving averages, indicating a bearish trend. Immediate support is at $2,600, with potential declines targeting $2,570/2,536/$2,500 and lower. Resistance sits at $2,660; breaking this level could push prices towards 2,680/2,680/2,700/$2,720.

A strategy of buy on dips around $2600 is advised, with a stop-loss at $2,570 and a target price at $2,700